The term interest rate swaps:
A) refers to a "single-currency interest rate swap" shortened to "interest rate swap".
B) involves "counterparties" who make a contractual agreement to exchange cash flows at periodic intervals.
C) can be "fixed-for-floating rate" or "fixed-for-fixed rate".
D) All of these.

Question

Quizplus · Accepted Answer

All the given options are correct. Interest rate swaps involve the exchange of cash flows between two counterparties at periodic intervals. The most common type of interest rate swaps include fixed-for-floating rate swaps in which one counterparty pays a fixed interest rate while the other party pays a floating interest rate. However, fixed-for-fixed rate swaps are also possible. Therefore, option C is also correct. Option A is a specific type of interest rate swap, while option B is the general definition of interest rate swaps.

The Term Interest Rate Swaps