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The CIMA text lists as one of its advantages for interest rate swaps the following:
To hedge against variations in interest on floating rate debt and to protect the fair value of fixed rate debt instruments.
However, the CIMA Apptitude Mock paper says:
An IR Swap would not protect the value of fixed rate debt as it is beneficial to lower the rate of fixed rate debt.
Which should I go with?
Go with the text. The aptitude test answer seems to relate to a specific set of circumstances which might mean that in this case the value of the fixed rate debt is not protected.
If I were you, I wouldn’t spend too much time on these complications. Concentrate on how borrowers can exploit idiosyncrasies in interest rates to both enjoy lower interest rates for the required variable/fixed arrangement.
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