if interest rae increasing, in order to terminate a fixed rate receiver SWAP, how to terminate swap, do I pay to fixed rate payer to terminate or use swaption? which solution is better?
off the top of my head, three ways of terminating a swap 1) enter offsetting and not net the payements 2) enter offsetting and net payments 3) settle the PV upfront. So an offsetting swap would be enter as a floating rate receiver. A swaption is an option to enter a swap at a later date and at expiry the option is just worth the PV of the option rate and current market swap rate x notional.
If you get a question like on the sample regarding credit risk, use settle for PV. That was a tricky question.