A swap that involves the exchange of one set of interest payments for another set of interest payments is called a(n) ________.
A) interest rate swap
B) currency swap
C) swaption
D) national swap

Question

Quizplus · Accepted Answer

An interest rate swap involves the exchange of one set of interest payments for another set of interest payments. Choice B, currency swap, involves the exchange of streams of payments in different currencies. Choice C, swaption, is an option contract where the buyer has the right, but not the obligation, to enter into an interest rate swap. Choice D, national swap, is not a commonly used term in finance.

A Swap That Involves the Exchange of One Set of Interest