A Company That Borrows at a Floating Rate and Uses

question 1

True/False

A company that borrows at a floating rate and uses a swap to convert into a fixed rate is assuming some credit risk.

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Definitions:

Breaching Party

The entity or individual who fails to comply with the terms of a contract, thereby causing a breach.

Creditor

An individual, corporation, or other entity that is owed money by another entity, known as the debtor.

Legislation

Laws enacted by a government or legislative body to regulate, authorize, sanction, grant, declare or restrict.

Debt

An amount of money borrowed by one party from another, under the condition that it is to be paid back at a later date, often with interest.