An interest rate swap involving the exchange of floating-rate obligations for fixed-rate obligations is known as
A)swaption.
B)swap option.
C)forward swaps.
D)plain vanilla.

Question

Quizplus · Accepted Answer

The term "plain vanilla" is commonly used to refer to a straightforward, standard financial instrument or transaction. A fixed-for-floating interest rate swap is one of the most common and basic forms of interest rate swaps, and is therefore considered a plain vanilla swap. Swaption refers to an option to enter into a swap, swap option refers to an option to change the terms of an existing swap, and forward swaps is not a common term in reference to interest rate swaps.

An Interest Rate Swap Involving the Exchange of Floating-Rate Obligations