In an interest-only currency swap
A)the counterparties must raise the actual notational principal in their home markets; then exchange it for the foreign currency they desire.They must also hedge with forward contracts on the currency.
B)the counterparties periodically exchange the amortized portions of the notational principals.
C)the counterparties must raise the actual notational principal in their home markets; then exchange it for the foreign currency they desire.They must also hedge with forward contracts on the currency.Additionally,the counterparties periodically exchange the amortized portions of the notational principals.
D)none of the options

Question

Quizplus · Accepted Answer

In an interest-only currency swap, the counterparties exchange only the interest payments, not the principal. Therefore, they do not need to raise the actual notational principal in their home markets or hedge with forward contracts on the currency.

In an Interest-Only Currency Swap