An interest rate swap in which all the fixed payments are paid in one lump sum is called a/an:
A) amortised swap.
B) term swap.
C) zero-coupon swap.
D) none of the given choices.

Question

Quizplus · Accepted Answer

A zero-coupon swap is an interest rate swap in which one party makes a single payment of the present value of the fixed payments at the beginning of the swap, while the other party makes periodic floating payments. This allows the fixed-rate payer to lock in a fixed interest rate without having to make periodic payments.

An Interest Rate Swap in Which All the Fixed Payments