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In SD20, when comment on the disadvantage of swap (Fitzaharris Co) , the examiner wrote :
“As swaps are OTC instruments, they cannot be traded or allowed to lapse if they are not needed”.In SD16, when advise on the value of swap ( Pault Co), the examiner wrote:
“Pault may choose to take out another swap then on different terms or let the arrangement lapse and pay floating rate on the loan…”.I am confusing whether swap could be allowed to lapse or not ? Please explain. Thank you.
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