The two parties contracting to exchange their respective interest payments in an interest rate swap are formally called:
A) options holders.
B) counterparties.
C) exchange parties.
D) long and short positions.

Question

Quizplus · Accepted Answer

The formal term for the two parties in an interest rate swap is counterparties. Option holders are not relevant to interest rate swaps. Exchange parties could be a generic term for any parties involved in an exchange, not just specifically for interest rate swaps. Long and short positions refer to different types of investment strategies and are not specific to interest rate swaps.

The Two Parties Contracting to Exchange Their Respective Interest Payments