Swaps equivalent

CFA Level II
#1

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?

#2

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

#3

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%.