The value of a pay-fixed, receive floating interest rate swap is found as the value of a

a. floating-rate bond times the value of a fixed-rate bond.

b. floating-rate bond plus the value of a fixed-rate bond.

c. floating-rate bond minus the value of another floating-rate bond.

d. fixed-rate bond minus the value of another fixed-rate bond.

e. floating-rate bond minus the value of a fixed-rate bond.

Swap payments typically involve adjusting for the fraction of the year in some fashion. This adjustment is known as

a. the compounding convention

b. the accrual period

c. the fraction convention

d. the money market convention

e. the payment period

The notional amount is never exchanged in an interest rate swap.

True False

In an interest rate swap, the upcoming floating payment will not be determined until the end of the current settlement period.

True False

A plain vanilla interest rate swap is equivalent to issuing a fixed-rate bond and using the proceeds to buy a floating-rate bond or vice versa.

True False

A swap can be terminated by having the party owing the greater amount make a cash payment.

True False

If a swap is effectively terminated by entering into the opposite swap with another counterparty, the credit risk will be eliminated.

True False