Interest Rate Swaps Can Be Used to Change the Index

question 270

True/False

Interest rate swaps can be used to change the index which determines the variable rate on a firm's
debt.

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Definitions:

Equal Cash Flows

A series of identical cash inflows or outflows occurring over a specified period.

Annuity

A series of equal cash receipts spaced equally in time; a series of equal net cash flows at fixed time intervals.

Sensitivity Analysis

A form of analysis that considers the impact of changing one or more inputs or assumptions on the resulting outcome.

Likelihoods

The probabilities or chances of different outcomes occurring.