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94
A floating-for-fixed currency swap is equivalent to
A.Two interest rate swaps, one in each currency
B.A fixed-for-fixed currency swap and one interest rate swap
C.A fixed-for-fixed currency swap and two interest rate swaps, one in each currency
D.None of the above
A.Two interest rate swaps, one in each currency
B.A fixed-for-fixed currency swap and one interest rate swap
C.A fixed-for-fixed currency swap and two interest rate swaps, one in each currency
D.None of the above
Answer: B
A floating-for-fixed currency swap where the floating rate is paid in currency X and the fixed rate is received in currency Y is equivalent to (a) a fixed-for-fixed currency swap where, say, 5% in currency X is paid and the fixed rate in currency Y is received, (b) a regular interest rate swap where 5% in currency X is received and floating in currency X is paid.
A floating-for-fixed currency swap where the floating rate is paid in currency X and the fixed rate is received in currency Y is equivalent to (a) a fixed-for-fixed currency swap where, say, 5% in currency X is paid and the fixed rate in currency Y is received, (b) a regular interest rate swap where 5% in currency X is received and floating in currency X is paid.
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Billie34 (04.02.2023)
A fixed-for-floating swap is a legally binding agreement between two parties in which one party exchanges the interest cash flows of one or more fixed-rate loans held by the other party for those of one or more floating-rate loans. The underlying loans' principle is not affected. http://wordwipe.co/
Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015