If a company enters into a hedging contract to swap a floating interest rate for a fixed rate, by the end of the contract the interest rate incurred by the company will equal
A) the difference between the fixed and the floating rate.
B) the floating rate.
C) the fixed rate.
D) whichever rate is highest.

Question

Quizplus · Accepted Answer

When a company enters into a hedging contract to swap a floating interest rate for a fixed rate, it means the company will pay the fixed rate throughout the duration of the contract, regardless of fluctuations in the floating rate.

If a Company Enters into a Hedging Contract to Swap