Anyone would please help me with the following questions:
Is long-position in a floating-rate note lender？ (I thought it should be borrower)
2.Is long-position in a interest rate forward lender?
3.What is the duration of a long-position in a floating-rate note
Always confused with the long/short position in interest rate products.
Here is a question that I took in the Qbank
Which of the following statements is most accurate? The duration of a long-position in a floating-rate note is:
A) close to zero and is unaffected by the addition of a receive-floating position in a swap. B) close to zero but increases with the addition of a pay-floating position in a swap. C) equal to its maturity but decreases to near zero with the addition of a pay-floating position in a swap.
Your answer: C was incorrect. The correct answer was B) close to zero but increases with the addition of a pay-floating position in a swap.
A floating-rate note’s value will be relatively stable because the payments vary with changes in the interest rates. For the long position (the lender), adding a pay-floating position will produce a synthetic fixed-rate position whose value will change with changes in interest rates.
Thanks in advance!