In a typical interest rate swap contract the swap rate is, Ask an Expert

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In a typical interest rate swap contract, the swap rate is best described as the interest rate for the:

A. fixed-rate leg of the swap.

B. floating-rate leg of the swap.

C. difference between the fixed and float legs of the swap.

Are these statements correct?

Statement 1: The yield to maturity of a coupon bond is the expected rate of return on a bond if the bond is held to maturity, there is no default, and the bond and all coupons are reinvested at the original yield to maturity.

Statement 2: Treasury curves and swap curves can differ because of differences in their credit exposures, liquidity, and other supply/demand factors.

A. Both statements are correct.

B. Both statements are not correct.

C. Only statement 1 is correct.

D. Only statement 2 is correct.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92721584

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