The fixed rate in a swap contract is
A) a certain short rate in the market when the contract is signed.
B) a certain long rate in the market when the contract is signed.
C) negotiated by the parties in the contract.
D) the difference between stated long and short rates when the contract is signed.

Question

Quizplus · Accepted Answer

The fixed rate in a swap contract is not determined by the prevailing short or long rates in the market at the time the contract is signed. Rather, it is negotiated by the parties involved in the contract to suit their specific needs and preferences. Therefore, choice C is the correct answer.

The Fixed Rate in a Swap Contract Is