- CFA Exams
- CFA Level I Exam
- Study Session 12. Fixed Income (1)
- Reading 32. The Term Structure and Interest Rate Dynamics
- Subject 4. The Swap Curve (LIBOR Curve)
CFA Practice Question
The swap rate curve:
II. is a default-free curve.
III. always trades through (above) the corresponding bond curve.
I. plots maturity (or length) of the swap against the fixed rate you will have to pay/receive if you enter into the swap.
II. is a default-free curve.
III. always trades through (above) the corresponding bond curve.
Correct Answer: I and III
It is not a default-free curve. Instead it is an inter-bank or AA rated curve.
User Contributed Comments 1
| User | Comment |
|---|---|
| Querdenker | Well, most banks are down at Single A these days... |