Interest rate and currency swaps allow one party to exchange a:
A)ﬂoating interest rate or currency value for a ﬁxed value over the contract term.
B)ﬁxed interest rate or currency value for a lower ﬁxed value over the contract term.
C)ﬂoating interest rate or currency value for a lower ﬂoating value over the contract term.
D)ﬁxed interest rate position for a currency position over the contract term.
E)None of the above.

Question

Quizplus · Accepted Answer

Interest rate and currency swaps allow one party to exchange a floating interest rate or currency value for a fixed value over the contract term. This is the main purpose of these swaps. Option B is incorrect as it suggests exchanging a fixed rate for a lower fixed value, which is not the objective of the swap. Option C is incorrect as it suggests exchanging a floating rate for a lower floating value, which is not the objective of the swap. Option D is incorrect as it suggests exchanging a fixed interest rate position for a currency position, which is a different type of financial instrument.

Interest Rate and Currency Swaps Allow One Party to Exchange