Exercise 21.4.7 Afirm holds long-duration corporate bonds. It uses swaps to create syntheticfloating-rate assets at attractive spreads

Question:

Exercise 21.4.7 Afirm holds long-duration corporate bonds. It uses swaps to create syntheticfloating-rate assets at attractive spreads to LIBOR and to shorten the duration much as A does in Fig. 21.9. Why should the fact that most corporate bonds are callable trouble the firm? How may callable swaps help?

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