Question #29
Reading: Reading 30 Pricing and Valuation of Forward Commitments
PDF File: Reading 30 Pricing and Valuation of Forward Commitments.pdf
Page: 13
Status: Unattempted
Correct Answer: B
Question
The price and value of a plain vanilla interest-rate swap are:
Answer Choices:
A. never equal
B. only equal at the inception of a swap contract
C. equal in equilibrium
Explanation
The price of a swap is the fixed rate specified in the swap and is the same for the payer
and the receiver. The value is the dollar value of the contract to the fixed-rate payer and is
the opposite of the value to the floating-rate payer.