A Plain Vanilla Interest Rate Swap

question 16

Multiple Choice

A plain vanilla interest rate swap:

• A)requires the fixed-rate borrower to make fixed-rate swap payments
• B)is an arrangement that modifies a borrower's obligation to their lender
• C)is the exchange of interest and principal payments
• D)requires a floating-interest rate payment calculated using the 'swap rate'
• E)is settled by a swap payment which is the difference between the floating- and fixed-rate interest payments calculated on an agreed notional principal.

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