Suppose that for the next five years party X agrees to pay party Y 10% per year, while party Y agrees to pay party X six-month LIBOR (London Interbank Offered Rate). Party X is a fixed-rate payer / ________, while party Y is a floating-rate payer / ________.

Question

Quizplus · Accepted Answer

Party X, by agreeing to pay a fixed rate and receive a floating rate (six-month LIBOR), is a fixed-rate payer and a floating-rate receiver. Party Y, by agreeing to pay a floating rate and receive a fixed rate, is a floating-rate payer and a fixed-rate receiver.

Suppose That for the Next Five Years Party X Agrees