An interest rate swap is similar to which of the following transactions?
A) Borrowing money at one floating rate and lending it at a higher floating rate
B) The purchase of a share and the sale of a bond
C) A series of forward rate agreements (FRAs)
D) All of the given choices

Question

Quizplus · Accepted Answer

An interest rate swap involves two parties agreeing to exchange future interest rate payments. This is similar to a series of forward rate agreements (FRAs), where two parties agree to exchange a fixed rate for a floating rate on a specific future date. The other choices (A and B) involve different types of transactions.

An Interest Rate Swap Is Similar to Which of the Following