A ____ gives its owner the right to enter into a swap.

Question

A ____ gives its owner the right to enter into a swap.​

Quizplus · Accepted Answer

A swaption is an option on an interest rate swap. It gives its owner the right, but not the obligation, to enter into a swap agreement on a specified future date at a predetermined fixed rate. Therefore, a swaption provides flexibility to the owner as they can choose to enter into the swap if it is favorable to them based on prevailing market conditions. The other options (basis swap, callable swap, and putable swap) do not provide the same level of flexibility and do not give the owner the right to enter into a swap.

A ____ Gives Its Owner the Right to Enter into a Swap.​

A ____ Gives Its Owner the Right to Enter into a Swap.