- CFA Exams
- CFA Level I Exam
- Study Session 16. Derivatives
- Reading 49. Basics of Derivative Pricing and Valuation
- Subject 6. Pricing and Valuation of Swap Contracts

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**CFA Practice Question**

In an interest rate swap, the swap rate is the ______.

B. reference rate (e.g., LIBOR) used to calculate the floating rate

C. floating rate that the fixed-rate receiver agrees to pay over the life of the swap

D. spread between the fixed rate and floating rate. Both parties use the spread at the end of each period to calculate the net payment

A. fixed rate that the fixed-rate payer agrees to pay over the life of the swap

B. reference rate (e.g., LIBOR) used to calculate the floating rate

C. floating rate that the fixed-rate receiver agrees to pay over the life of the swap

D. spread between the fixed rate and floating rate. Both parties use the spread at the end of each period to calculate the net payment

Correct Answer: A

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**User Contributed Comments**
1

User |
Comment |
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americade |
the swap rate = the fixed payer contract rate |