The swap rate should result in the present value of the expected payments equalling the present value of the expected receipts.

Name: The swap rate should result in the present value of the expected payments equalling the present value of the expected receipts.
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Question

Quizplus · Accepted Answer

This is because the swap rate is determined such that the fixed-rate payment and the floating-rate payment will have an equal present value, based on the expected interest rates over the life of the swap.

The Swap Rate Should Result in the Present Value of the Expected