Which of the following statements regarding interest rate swaps is incorrect?
A) The principal involved is called notional.
B) Parties involved borrow funds where they have a comparative advantage.
C) The two parties in the swap always share equally the cost of the spread that the intermediary receives.
D) The financial intermediary involved often engages in an offsetting swap, known as a matched swap.

Question

Quizplus · Accepted Answer

The cost of the spread that the intermediary receives is not always shared equally between the two parties in the swap. This depends on the terms of the swap agreement.

Which of the Following Statements Regarding Interest Rate Swaps Is