A swap that involves the exchange of one set of interest payments for another set of interest payments is called a(n)________.
A) interest-rate swap
B) currency swap
C) swaption
D) notional swap

Question

Quizplus · Accepted Answer

An interest-rate swap involves exchanging one set of interest payments for another set of interest payments, typically between two parties looking to hedge against different interest rate risks. Currency swaps involve the exchange of different currencies, swaptions are options on interest-rate swaps, and notional swaps involve the exchange of principal amounts rather than interest payments.

A Swap That Involves the Exchange of One Set of Interest