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Briey explain what an interest rate swap is. Give at least two applications of interest rate swaps. Describe how an interest rate swap can be

Brieﬂy explain what an interest rate swap is. Give at least two applications of interest rate swaps. Describe how an interest rate swap can be replicated using fonivard rate agreements.

Is the fixed-rate payer in an interest rate swap 'short the bond market' or 'Iong the bond market'?

Explain your reasoning?

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