An interest rate swap involving the exchange of floating-rate obligations for fixed-rate obligations is known as
A) a swaption.
B) a swap option.
C) forward swaps.
D) plain vanilla.

Question

Quizplus · Accepted Answer

A plain-vanilla swap involves the exchange of floating-rate obligations for fixed-rate obligations. Swaption refers to the option to enter into a swap agreement, while a swap option involves the option to switch between floating and fixed interest rates. Forward swaps involve the settlement of a swap at a future date with a predetermined interest rate, while plain vanilla swaps involve the immediate exchange of obligations.

An Interest Rate Swap Involving the Exchange of Floating-Rate Obligations