In a ________, the party that wants out of the transaction will arrange for an additional swap in which (1) the maturity on the new swap is equal to the time remaining of the original swap, (2) the reference rate is the same, and (3) the notional principal amount is the same.

Question

Quizplus · Accepted Answer

This is known as a swap reversal, where a party enters into a new swap that mirrors the original swap's terms (maturity, reference rate, and notional amount) but with the opposite position, effectively canceling out the original swap's obligations.

In a ________, the Party That Wants Out of the Transaction