An interest rate swap agreement is which of the following?
A)A standardized contract to buy and sell financial assets in the future at an interest rate set today
B)an agreement between two parties to trade principal payments at a later date regardless of the interest rate
C)an agreement between two parties to trade interest payment streams
D)None of the above is correct.

Question

Quizplus · Accepted Answer

An interest rate swap agreement is an agreement between two parties to trade interest payment streams. It allows one party to swap their fixed interest rate payments for the variable interest rate payments of another party, or vice versa. This allows both parties to manage their interest rate risk and potentially reduce their overall borrowing costs. Option A describes a futures contract, while option B is not a common type of financial agreement. Option D is incorrect as option C is the correct answer.

An Interest Rate Swap Agreement Is Which of the Following