easy · FRM Part 1
In a plain-vanilla interest-rate swap, which of the following best describes the fundamental exchange occurring between counterparties?
- Periodic fixed-rate interest payments for periodic floating-rate interest payments in the same currency.
- The exchange of notional principal at the beginning and the end of the contract life.
- Fixed interest payments in one currency for floating interest payments in a different currency.
- A one-time payment at maturity based on the difference between the strike and the spot rate.
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