In terms of valuation, a 12-year interest rate swap can be can be considered in terms of
A)a series of option contracts.
B)a zero-coupon bond.
C)a U.S.Treasury STRIP.
D)bond-equivalent valuation.
E)securitization of a derivative contract.

Question

Quizplus · Accepted Answer

A 12-year interest rate swap is typically valued using bond-equivalent valuation, which involves discounting the fixed and floating cash flows of the swap using appropriate interest rates, similar to how bonds are valued.

In Terms of Valuation, a 12-Year Interest Rate Swap Can