Trivia Quiz On Interest Rate Swap!

5 Questions | Total Attempts: 1052

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Trivia Quiz On Interest Rate Swap!

Interest rate swaps are common in the financial market, and they help firms to limit their exposure to risk. Swaps are majorly derivative contracts, and we got to cover much about it through the past few days. The trivia quiz below is designed to test out just how much you understood about it, give it a shot and keep revising!


Questions and Answers
  • 1. 
    An interest rate swap usually involves
    • A. 

      Swapping debt maturities

    • B. 

      Swapping fixed interest rate payments for floating interest rate payments.

    • C. 

      Swapping interest rate tax liabilities

    • D. 

      Swapping debt principal payments

  • 2. 
    Usually, interest rate swaps are
    • A. 

      Done directly between the two counterparties

    • B. 

      Arranged by government regulatory agencies

    • C. 

      Arranged by financial institutions

    • D. 

      Arranged by the World Bank

  • 3. 
    In an interest rate swap, the firm wishing to convert fixed rate obligation ( loan) to floating-rate loan.
    • A. 

      Will pays fix and receive floating for the term of the swap contract

    • B. 

      Will receive fix and pay floating rate for the term of the swap contract

    • C. 

      Such a swap not possible

  • 4. 
    Swaps are used to protect against _____ risk, but they do not automatically protect the two parties from _____ risk.
    • A. 

      Interest-rate, default

    • B. 

      Default, liquidity

    • C. 

      Liquidity, interest rate

    • D. 

      Forecasting, principal

  • 5. 
    A currency swap is
    • A. 

      An exchange of floating-rate payments for fixed-rate payments.

    • B. 

      An exchange of one currency for another currency in the spot exchange market.

    • C. 

      An exchange of interest payments denominated in one currency for interest payments denominated in another currency.

    • D. 

      An exchange of debt covenant terms in one country for those in another country

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