Interest rate swaps allow one party to exchange a:
A)floating interest rate for a fixed rate.
B)fixed interest rate for a lower fixed rate.
C)floating interest rate for a lower floating rate.
D)floating interest rate for a one-time immediate cash payment.
E)fixed interest rate for a one-time future cash payment.

Question

Quizplus · Accepted Answer

Interest rate swaps allow one party to exchange a floating interest rate for a fixed rate. This is known as a fixed-floating interest rate swap, where one party pays a fixed interest rate and receives a floating interest rate from the other party.

Interest Rate Swaps Allow One Party to Exchange A