Interest Rate Swaps Involve the Exchange of ________________

question 87

Multiple Choice

Interest rate swaps involve the exchange of ________________.

• A) fixed rate bonds for floating rate bonds
• B) floating rate bonds for fixed rate bonds
• C) net interest payments and an actual principal swap
• D) net interest payments based on notional principal, but no exchange of principal

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Definitions:

Par

The face value of a stock or bond, which is the amount stated on the certificate or instrument itself.

Treasury Stock

Securities initially distributed and subsequently bought back by the issuer, which lowers the quantity of shares actively traded on the market.

Common Stock

Equity securities that represent ownership in a corporation, giving shareholders voting rights and a residual claim on corporate earnings in the form of dividends.

Authorized

Pertains to the maximum number of shares a corporation is legally permitted to issue, as specified in its charter.