Which of the below statements is TRUE?

Question

Quizplus · Accepted Answer

The interest rate swap indeed allows each party to accomplish its asset/liability objective of locking in a spread. A is incorrect because the position of a fixed-rate payer is equivalent to a long position in a fixed-rate bond and a short position in a floating-rate bond, which is a correct statement. C is incorrect because the whole purpose of an interest rate swap is to alter cash flow characteristics. D is incorrect because issuing securities in the Eurodollar bond market and using the interest rate swap can indeed reduce the cost of issuing securities.

Which of the Below Statements Is TRUE