In general, the idea of an interest rate swap is to allow investors with differing credit worthiness and funding needs to exploit their particular comparative advantage in borrowing.

Question

Quizplus · Accepted Answer

Interest rate swaps allow parties to exchange interest rate payments, often because they have different needs or advantages in terms of fixed or floating rates due to their unique credit situations or funding strategies. This enables each party to optimize their borrowing costs or investment returns.

In General, the Idea of an Interest Rate Swap Is