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Interest rate forwards to value a simple interest rate swap contract

This topic has 1 reply, 2 voices, and was last updated 2 years ago by John Moffat.

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May 15, 2022 at 8:55 pm #655777
Cherry14
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Hello sir John,
The technical article on interest rate forwards to value a simple interest rate swap contract. According to it we do a FRA in order to hedge against increasing interest rates.
My question is, as we already did a FRA then why are we also using a Swap contract?
May 16, 2022 at 6:22 am #655791
John Moffat
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The article is not saying that they will use FRA’s in addition to doing a swap.
It is saying that it is the forward interest rates that will have been used to determine the interest rate given by the swap.
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