A lender can effectively convert a fixed-rate debt into a floating-rate debt by using an interest rate swap.

Name: A lender can effectively convert a fixed-rate debt into a floating-rate debt by using an interest rate swap.
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Question

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By entering into an interest rate swap, the lender can exchange the fixed interest payments they receive from the borrower for floating rate payments. This effectively converts the lender's fixed-rate debt into a floating-rate debt.

A Lender Can Effectively Convert a Fixed-Rate Debt into a Floating-Rate