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. In an interest-rate swap: Both the net amount of interest due and the amount borrowed (notional amount) usually flows to one or the other
. In an interest-rate swap:
- Both the net amount of interest due and the amount borrowed (notional amount) usually flows to one or the other party to the swap.
- The transaction usually combines an interest rate cap and an interest rate floor.
- Only the net amount of interest due usually flows to one or the other party to the swap.
- A borrowing institutions objective is not to manage interest rate risk.
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