Which of the Following About Interest Rate Swaps Is NOT

question 48

Multiple Choice

Which of the following about interest rate swaps is NOT correct?

• A) An interest rate swap allows a company to change the net characteristics of its interest rate cash flows.
• B) An interest rate swap is based on interest rates worked out on a notional principal.
• C) If a company has a fixed-rate loan it can enter into an interest rate swap whereby the bank lender will pay it a variable rate to net out the fixed rate from the company.
• D) A cross-currency swap involves the exchange and interest payments based on a fixed exchange rate.

---

Definitions:

Observed Values

The data or outcomes that are actually measured or collected in an experiment or survey.

Estimated Values

Values calculated within a statistical model that approximate the real data points, often used in making predictions.

Coefficient Of Determination

A statistical measure that indicates the proportion of the variance in the dependent variable predictable from the independent variable(s).

Standard Error

A statistical measure that estimates the accuracy of a sample mean by quantifying the dispersion of sample means around the population mean.