Why can a fixed-rate payer in an interest rate swap be viewed as being short the bond

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Why can a fixed-rate payer in an interest rate swap be viewed as being short the bond market, and the floating-rate payer be viewed as being long the bond market?

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Foundations Of Financial Markets And Institutions

ISBN: 9780136135319

4th Edition

Authors: Frank J Fabozzi, Franco G Modigliani, Frank J Jones

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Question Posted: Mar 02, 2024 05:01 AM

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Why can a fixed-rate payer in an interest rate swap be viewed as being short the bond

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Answer In an interest rate swap one counterparty agrees to pay a fixed interest rate while the other counterparty agrees to pay a floating interest rate based on a reference index such as LIBOR Heres ...View the full answer

Foundations Of Financial Markets And Institutions

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