Interest rate and currency swaps allow one party to exchange a:
A) floating interest rate or currency value for a fixed value over the contract term.
B) fixed interest rate or currency value for a lower fixed value over the contract term.
C) floating interest rate or currency value for a lower floating value over the contract term.
D) a fixed interest rate position for a currency position over the contract term.

Question

Quizplus · Accepted Answer

Interest rate and currency swaps allow one party to exchange a floating interest rate or currency value for a fixed value over the contract term. This can help mitigate risk for both parties involved, as one party may want a fixed rate to protect against potential interest rate hikes while the other party may prefer a floating rate that could potentially decrease in value. Similarly, currency swaps can help protect against currency fluctuations by locking in a fixed exchange rate.

Interest Rate and Currency Swaps Allow One Party to Exchange