Interest rate swaps can be used for all of the following purposes except:
A)to borrow at the prime rate
B)to convert a fixed-rate loan into a floating-rate loan
C)to convert a floating-rate loan into a fixed-rate loan
D)to speculate on interest rates
E)to hedge interest rate risk

Question

Quizplus · Accepted Answer

Interest rate swaps cannot be used to directly borrow at the prime rate. They involve two parties who exchange cash flows based on different interest rates.

Interest Rate Swaps Can Be Used for All of the Following