6. Factors affecting interest rate swap performance Consider a plain vanilla swap where Shallot Company is making fixed interest rate payments to Poman Company in exchange for variable interest rate payments from Poman Company equal to LIBOR plus 4 percent. If there is an announcement stating the federal government is expected to run a budget deficit, which financial market participant would benefit least from the change in economic conditions? Shallot Company O Poman Company 7. Interest rate caps, floors, and collars 1. 2. 3. STEP: 2 of 3 The simultaneous (1) purchase of an interest rate derivative that offers payments in periods when the specific interest rate index exceeds a specific interest rate and (2) sale of an interest rate derivative that offers payments in periods when the specific interest rate index falls below a specific interest rate is called a(n): O Interest rate collar O Plain vanilla swap Interest rate floor O Interest rate cap