Which of the following is not true about interest rate swaps? A) Payments are based on a notional principal. B) Floating rate payers profit if interest rates fall. C) Payments can be quarterly as well as semi-annually. D) Parities exchange debt obligations. E) Default risk is a possibility in the swaps market.

Question

Quizplus · Accepted Answer

Interest rate swaps do not involve the exchange of debt obligations or the transfer of any underlying assets, only the swapping of cash flows based on interest rates. Thus, parity in the swaps market is not related to debt obligations.

Which of the Following Is Not True About Interest Rate