Foreign exchange swaps involve: A. Making profit by exploiting the difference be

Question

Foreign exchange swaps involve:
A. Making profit by exploiting the difference between the “buy” and “sell” price for foreign currency.
B. Selling one currency on the spot market and at the same time purchasing it forward.
C.buying foreign government bonds using foreign currency.
Which one is right?? And why?
Thank you so much!! Foreign exchange swaps involve:
A. Making profit by exploiting the difference between the “buy” and “sell” price for foreign currency.
B. Selling one currency on the spot market and at the same time purchasing it forward.
C.buying foreign government bonds using foreign currency.
Which one is right?? And why?
Thank you so much!!
A. Making profit by exploiting the difference between the “buy” and “sell” price for foreign currency.
B. Selling one currency on the spot market and at the same time purchasing it forward.
C.buying foreign government bonds using foreign currency. A. Making profit by exploiting the difference between the “buy” and “sell” price for foreign currency.
B. Selling one currency on the spot market and at the same time purchasing it forward.
C.buying foreign government bonds using foreign currency.
Which one is right?? And why?
Thank you so much!!

Explanation / Answer

C. Buying foreign government bonds using foreign currency.

Parties use foreign exchange swap to reduce the risk of foreign exchange fluctuations. Investors willing to reduce credit risk buys bonds issued by foreign borrower at a lower rate of interest.

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