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)fixed interest rate position for a currency position over the contract term.
E)None of the above.

Question

Quizplus · Accepted Answer

Interest rate and currency swaps involve exchanging a floating interest rate or currency value for a fixed value over the contract term, providing protection against fluctuations in interest rates or exchange rates. Option B, fixed for a lower fixed value, and option C, floating for a lower floating value, do not provide the same level of protection or benefit. Option D involves exchanging one position for another, but does not specify the terms of the exchange, so it is not a complete answer.

Interest Rate and Currency Swaps Allow One Party to Exchange