A Plain Vanilla Interest-Rate Swap Is an Agreement to Exchange

question 24

Multiple Choice

A plain vanilla interest-rate swap is an agreement to exchange a series of periodic payments,one computed at a fixed rate and the other at

• A)A floating rate indexed to a money-market rate in the same currency (e.g. ,Libor).
• B)A floating rate linked to the return on any financial index,e.g. ,an equity index.
• C)A floating rate indexed to a money-market rate in the same or a different currency.
• D)A floating rate indexed to a commodity (e.g. ,gold)price.

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