Schweser practice V1 third afternoon, p195 Q47, it says since we SBK pay floating, it is subjected to cash flow risk, I’m a bit confused, in swap, either we pay floating or we pay fixed, so if we pay fix, do we have cash flow risk also? If it is true, can I say in any swap, we only have cash flow risk and no price risk?
Anyone can give a example of price risk (market risk) for swap?
In Q46 enertech case, it is mentioned that they long interest rate collar,
So if we buy interest rate floor and sell cap to finance it, is called as “ short
Interest rate collar”?