A key use of interest-rate swaps is to:
A)Eliminate risk for both parties involved in the transaction.
B)Earn the fees for constructing the swaps.
C)Provide a hedge against interest-rate risk.
D)Manage government revenues.

Question

Quizplus · Accepted Answer

The key use of interest-rate swaps is to provide a hedge against interest-rate risk, where two parties exchange different types of interest rates on their loans or investments to reduce or eliminate the interest-rate risk associated with their debt. This can help manage risk and potentially reduce costs associated with interest payments.

A Key Use of Interest-Rate Swaps Is To