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hw0799
04-01-2007, 04:19 PM
the manual said that interest rate swap is like : purchasing a fixed rate bond financed with a floating rate bond.

but I think it depends,
if you enter an interest rate swap, pay fixed rate, and receive floating rate payment, then you are buying a floating rate bond financed with fixed rate bond.

and vice versa.

Is this understand correct? Thanks.

carzymathematician
04-08-2007, 07:44 AM
the manual said that interest rate swap is like : purchasing a fixed rate bond financed with a floating rate bond.

but I think it depends,
if you enter an interest rate swap, pay fixed rate, and receive floating rate payment, then you are buying a floating rate bond financed with fixed rate bond.

and vice versa.

Is this understand correct? Thanks.

Yup, the comparison does depend on whether you're the buyer or the seller of the swap.