The term interest rate swap
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 the options

Question

Quizplus · Accepted Answer

The term interest rate swap can refer to a "single-currency interest rate swap," where two counterparties enter into a contractual agreement to exchange cash flows at periodic intervals. The swap can be "fixed-for-floating rate," where one counterparty pays a fixed rate of interest and receives a floating rate of interest, while the other counterparty does the opposite. Alternatively, the swap can be "fixed-for-fixed rate," where both counterparties exchange fixed-rate interest payments. Therefore, all options are correct.

The Term Interest Rate Swap