A Plain Vanilla Interest-Rate Swap Is an Agreement to Exchange

question 23

Multiple Choice

A plain vanilla interest-rate swap is an agreement to exchange a series of periodic payments, one computed at a fixed rate and the other at

• A) A floating rate indexed to a money-market rate in the same currency (e.g., Libor).
• B) A floating rate linked to the return on any financial index, e.g., an equity index.
• C) A floating rate indexed to a money-market rate in the same or a different currency.
• D) A floating rate indexed to a commodity (e.g., gold) price.

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