In a Vanilla Interest Rate Swap

question 96

Multiple Choice

In a vanilla interest rate swap:

• A) the amounts payable between parties depend on a specified principal that is exchanged at the outset.
• B) one party pays another party an amount calculated according to a floating interest rate on a notional principal, in exchange for an amount calculated on the basis of a fixed interest rate.
• C) only interest flows are exchanged until maturity, when the principal is exchanged according to the difference in the interest rates over the lifetime of the swap.
• D) the amounts payable between parties depends on a specified principal that is exchanged at the beginning and at the end.

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Definitions:

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