A firm entering into a currency or interest rate swap agreement holds no responsibility for the timely servicing of its own debt obligations since that responsibility now is born by the second party to the contract.

Question

Quizplus · Accepted Answer

While a swap agreement shifts some of the interest rate or currency fluctuation risks to the second party, it does not relieve the first party from the responsibility of servicing its own debt obligations. Both parties are still responsible for their respective debt obligations.

A Firm Entering into a Currency or Interest Rate Swap