It is common to include
A)both the interest and principal payments in an interest rate swap.
B)only the interest payments in a currency swap.
C)both the interest and principal payments in a currency swap.
D)only the principal payments in an interest rate swap.
E)only the principal payments in a currency swap.

Question

Quizplus · Accepted Answer

In a currency swap, both the interest and principal payments are exchanged in different currencies. This is because the purpose of a currency swap is to exchange one currency for another, often to take advantage of a lower interest rate in one currency. Therefore, both principal and interest payments must be exchanged to fully swap the currencies. The other options are incorrect because they either leave out an important aspect of the swap (such as only exchanging interest payments) or include something that is not typically included in those types of swaps (such as principal payments in an interest rate swap).

It Is Common to Include