An Equivalent Description of the Holding of a Receive-Floating Pay-Fixed

question 19

Multiple Choice

An equivalent description of the holding of a receive-floating pay-fixed swap is as follows:

• A)An exchange of a long position in a fixed-rate bond for a short position in a floating-rate note.
• B)A portfolio of long positions in forward-rate agreements (FRAs)for each swap payment date,all at the same fixed rate as the swap.
• C)A bond that pays the fixed rate minus the floating rate each period.
• D)All of the above.

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Definitions:

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