Which of the following describes the way a LIBOR-in-arrears swap differs from a plain vanilla interest rate swap?
A. Interest is paid at the beginning of the accrual period in a LIBOR-in-arrears swap
B. Interest is paid at the end of the accrual period in a LIBOR-in-arrears swap
C. No floating interest is paid until the end of the life of the swap in a LIBOR-in-arrears swap, but fixed payments are made throughout the life of the swap
D. Neither floating nor fixed payments are made until the end of the life of the swap
A
In a LIBOR-in-arrears swap interest is observed for an accrual period and paid at the beginning of that accrual period (not at the end of the accrual period which is normal)
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