Question

True or False

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

2. 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.​

Answer 1

QUESTION 1

True.

In interest rate swaps interest is exchanged between two parties. It is a interest rate derivative and in a derivative notional amount is never exchanged.

QUESTION 2:

True.

One method of Pricing of currency swap includes finding fixed rates in two currencies. These currencies will be similar to fixed rate in plain vanilla swap in home country and fixed rate swap in plain vanilla swap in foreign country.

Here it is given as fixed rate in plain vanilla swap in two respective currencies which is true based on explanation above.