Which of the following describes the way a LIBOR-in-arrears swap differs from a plain vanilla interest rate swap?
A) Interest is paid at the beginning of the accrual period in a LIBOR-in-arrears swap
B) Interest is paid at the end of the accrual period in a LIBOR-in-arrears swap
C) No floating interest is paid until the end of the life of the swap in a LIBOR-in-arrears swap, but fixed payments are made throughout the life of the swap
D) Neither floating nor fixed payments are made until the end of the life of the swap

Question

Quizplus · Accepted Answer

In a LIBOR-in-arrears swap interest is observed for an accrual period and paid at the beginning of that accrual period (not at the end of the accrual period which is normal)

Which of the Following Describes the Way a LIBOR-In-Arrears Swap