Which term describes a financial arrangement where two parties exchange risk?

The term that describes a financial arrangement where two parties exchange risk is "swap." In a swap, two parties agree to exchange cash flows or liabilities from financial instruments or assets for a specified period, which allows each party to manage its exposure to risk differently.

Swaps are commonly used in finance to hedge against risks such as interest rate fluctuations or changes in currency exchange rates. By entering into a swap agreement, parties can balance their risk profiles and potentially lower their overall financial exposure. This highlights the utility of swaps in risk management strategies for both corporations and financial institutions.

The other terms, while potentially related to financial transactions, do not specifically refer to the act of exchanging risk in a formalized arrangement. For example, "trade" generally refers to the general buying and selling of goods or services, "shuffle" does not have a relevant meaning in this context, and "switch" implies changing from one item to another without the connotation of an exchange of risk. Thus, "swap" is the most appropriate term that accurately captures the essence of the financial arrangement described.