The swap rate in a plain vanilla swap:
A)is the rate paid by the floating-rate payer
B)may require interest payments in a foreign currency
C)is an exact average of the forward rates
D)is a multi-period fixed rate
E)is set at the commencement of each swap period.

Question

Quizplus · Accepted Answer

The swap rate in a plain vanilla swap is a multi-period fixed rate, which is agreed upon by both parties at the beginning of the swap and remains fixed throughout the life of the swap. The other options are not accurate statements about the swap rate in a plain vanilla swap.

The Swap Rate in a Plain Vanilla Swap