Which of the following statements is FALSE?
A)Corporations use interest rate swaps routinely to alter their exposure to interest rate fluctuations. Firms can use interest rate swaps with duration-hedging strategies.
B)The value of a swap,while initially zero,will fluctuate over time as interest rates change.
C)An interest rate that adjusts to current market conditions is called a floating rate.
D)When interest rates rise,the swap's value will rise for the party receiving the fixed rate;conversely,it will fall for the party paying the fixed rate.

Question

Quizplus · Accepted Answer

When interest rates rise, the swap's value will fall for the party receiving the fixed rate and rise for the party paying the fixed rate, as the fixed rate becomes less attractive compared to the new higher market rates.

Which of the Following Statements Is FALSE