In a Fixed-For-Floating Interest Rate Swap

question 71

Multiple Choice

In a fixed-for-floating interest rate swap:

• A)if the BBSW is lower than expected, the swap develops a positive value for the floating-rate payer
• B)if the BBSW is higher than expected, the swap develops a positive value for the floating-rate payer
• C)if the BBSW is lower than expected, the swap develops a positive value for the fixed-rate payer
• D)if the BBSW is higher than expected, the swap develops a negative value for the fixed-rate payer
• E)if the BBSW is higher than the swap rate, the cash settlement is paid by the fixed-rate payer.

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Definitions:

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