Equity Swap

CFA Level I Derivatives
#1

When one party pays a fixed rate of interest in an equity swap, which of the following is least accurate?

A) The equity-return payer will gain if the equity return is zero. B) Unlike other swaps, in an equity swap the one-quarter-ahead payment is not known at the end of the previous quarter. C) The fixed-rate receiver will never get more than the fixed rate.

#2

C

If the equity return is negative, the equity payer will receive the negative return (base on notional) AND the fixed rate payment.

#3

C it is.

#4

magician you are right as usual.

#5

Give FratBoy the credit: he got it first.

#6

Sure. Fratboy thanks.

#7

No problem.