Interest Rate Swaps Allow a Firm to Exchange Fixed for Floating-Rate

question 14

True/False

Interest rate swaps allow a firm to exchange fixed for floating-rate payments, but a swap cannot reduce actual net interest expenses.

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Definitions:

Counterclaim

A legal claim brought against the plaintiff by the defendant within the same lawsuit.

Discovery

A pre-trial procedure in a lawsuit where each party can obtain evidence from the opposite party through various means, such as interrogatories, document requests, and depositions.

Deposition

A pretrial question and answer proceeding, usually conducted orally, in which a party or witness answers an attorney's questions. The answers are given under oath, and the session is recorded.

Affirmative Defense

A defense in which the defendant introduces evidence to negate or reduce liability, rather than simply denying the plaintiff's allegations.