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Basic Question 1 of 2
An interest rate swap is identical to ______.
II. issuing a fixed-rate bond in one currency, converting the proceeds to the other currency, and using the proceeds to purchase a floating-rate bond denominated in the other currency
III. issuing a floating-rate bond and using the proceeds to purchase a fixed-rate bond
IV. issuing a floating-rate bond and using the proceeds to buy a stock index portfolio
I. issuing a fixed-rate bond and using the proceeds to purchase a floating-rate bond
II. issuing a fixed-rate bond in one currency, converting the proceeds to the other currency, and using the proceeds to purchase a floating-rate bond denominated in the other currency
III. issuing a floating-rate bond and using the proceeds to purchase a fixed-rate bond
IV. issuing a floating-rate bond and using the proceeds to buy a stock index portfolio
User Contributed Comments 4
| User | Comment |
|---|---|
| danlan2 | II is not, it's more than interest rate swap |
| Masterkang | II is a version of currency Swap |
| epiziL2 | And IV is an equity swap |
| quanttrader | I and III represent counterparties in the swap transaction |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
describe how interest rate swaps are priced, and calculate and interpret their no-arbitrage value;
CFA® 2025 Level II Curriculum, Volume 5, Module 31.