1. Why might an individual or organization be willing to swap fixed-rate loans for floating-rate loans?
a) They may be able to postpone the payment of principal.
b) They may perceive that interest rates are ready to increase.
c) Floating rates are lower than fixed rates.
d) Their cash flows may vary directly with interest rates.
2. Which of the following statement is TRUE?
I. Pricing a currency swap means to find the fixed rates in the two currencies. These fixed rates are the same as the fixed rates on plain vanilla swaps in the respective currencies
II. Currency swap volume is greater than interest rate swap volume.