A key use of interest-rate swaps is to:
A) eliminate risk for both parties involved in the transaction.
B) earn the fees for constructing the swaps.
C) provide a hedge against interest-rate risk.
D) manage government revenues.

Question

Quizplus · Accepted Answer

Interest-rate swaps provide a hedge against interest-rate risk by allowing parties to exchange fixed and floating interest-rate payments. This helps parties manage their exposure to changes in interest rates, which can have a significant impact on their finances. While swaps may also involve fees for construction and various risks, the primary use and benefit of swaps is to manage interest-rate risk.

A Key Use of Interest-Rate Swaps Is To