Examples of "single-currency interest rate swap" and "cross-currency interest rate swap" is/are:
A) fixed-for-floating rate interest rate swap, where one counterparty exchanges the principal payment of a floating-rate debt obligations for fixed-rate principal payment of the other counter party.
B) fixed-for-fixed rate debt service (currency swap), where one counterparty exchanges the debt service obligations of a bond denominated in one currency for the debt service obligations of the other counter party denominated in same currency.
C) fixed-for-floating rate interest rate swap, where one counterparty exchanges the interest payments of a floating-rate debt obligations for fixed-rate interest payments of the other counter party.
D) None of these

Question

Quizplus · Accepted Answer

A single-currency interest rate swap involves both parties exchanging interest payments on a single currency, and a fixed-for-floating rate swap fits this description. Cross-currency interest rate swaps involve exchanging interest payments on two different currencies, and a fixed-for-fixed rate swap (currency swap) fits this description. However, option B specifies that both parties are exchanging debt service obligations in the same currency, which does not involve an interest rate component and is therefore not a type of interest rate swap. Option A also describes a fixed-for-floating rate swap, but it involves exchanging principal payments instead of interest payments.

Examples of "Single-Currency Interest Rate Swap" and "Cross-Currency Interest Rate