I found some mistakes in the questions I did. Just to clarify,

Is Longing a swap equivalent to :

Pay fixed rate? receive float?

long FRA?

Long interest rates?

Short Fixed rate bond

Long Floating rate bond?

I found some mistakes in the questions I did. Just to clarify,

Is Longing a swap equivalent to :

Pay fixed rate? receive float?

long FRA?

Long interest rates?

Short Fixed rate bond

Long Floating rate bond?

my answer sheet wrote “a pay fixed interest rate swap position is equivalent to being short a fixed rate bond and long a floating rate bond”

is this correct? i thought should be another way

Correct. You pay 6% and receive LIBOR.

If LIBOR = 8%, you gain +2%. If you are are short a fixed rate bond, and if LIBOR=8%, the bond price goes down you, and you still pay 6% fixed. The long bond will pay you 8%, for a net of +2%.

If LIBOR = 4%, you lose -2%. If you are are short a fixed rate bond, and if LIBOR=4%, the bond price goes down you, and you still pay 6% fixed. The long bond will pay you 4%, for a net of -2%.