Which of the following is not a way to terminate a swap:
A)the two counterparties cash settle the market value
B)enter into an opposite swap with another counterparty
C)hold the swap to its maturity date
D)use a forward contract or option on the swap to enter into an offsetting swap
E)borrow the notional amount and pay off the counterparty

Question

Quizplus · Accepted Answer

Terminating a swap typically involves neutralizing the contract's obligations rather than fulfilling them through external means such as borrowing. Options A, B, C, and D are legitimate methods to terminate or neutralize the impact of a swap. Option E, borrowing the notional amount to pay off the counterparty, does not directly terminate the swap agreement but rather addresses the financial obligations under the swap, which does not equate to a termination of the swap contract itself.

Which of the Following Is Not a Way to Terminate