A position in an interest rate swap can be interpreted as a position in a package of forward contracts but not in a package of cash flows from buying and selling cash market instruments.

Question

Quizplus · Accepted Answer

A position in an interest rate swap can indeed be interpreted as both a position in a package of forward contracts and as a series of cash flows equivalent to buying and selling cash market instruments, as swaps essentially involve exchanging one set of cash flows for another.

A Position in an Interest Rate Swap Can Be Interpreted