A 5-year swap contract can be viewed as a portfolio of 5 forward contracts with maturities of 1, 2, 3, 4 and 5 years. One important exception is that
A)the forward price is the same for the swap contract but not for the forward contracts.
B)the swap contract will have daily resettlement.
C)the forward contracts will have resettlement risk.
D)none of the above.

Question

Quizplus · Accepted Answer

In a swap contract, the forward price is fixed for the entire duration, whereas in individual forward contracts, the forward price can vary for each contract.

A 5-Year Swap Contract Can Be Viewed as a Portfolio