Question

True or False

1.Currency swap volume is greater than equity swap volume.​

2.Since 1998, the gross market value of currency swaps outstanding has always increased each year.​

Answer 1

1)Currency swap volume is greater than equity swap volume.​ - False

An equity swap is similar to an interest rate swap, but rather than one leg being the "fixed" side, it is based on the return of an equity index.Mostly every business at some point of time uses debt to fund its business and debt brings with it the interest rate risk. So, most of the businesses will use interest rate swaps to hedge their interest rate risk. but only those businesses will use currency swap who has foreign currency exposure or do business internationally.

Hence equity swap volume is greater than currency swap volume.

So the given statement is False.

.

2)Since 1998, the gross market value of currency swaps outstanding has always increased each year.​ - True

Since 1998, companies have involved in foreign trade and business have entered into globalisation. It has led to increase in use of currency swaps which in turn has led to increase in the gross market value of currency swaps outstanding at the end of each year.