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Answer: Unlike a vanilla interest rate swap, exchanged payments are NOT netted
The incorrect statement is **D**. In a commodity swap, the cash flows are generally **netted** between parties, just like in a standard interest rate swap. Why the others are true: - **A**: A commodity swap can be viewed as a strip of forward contracts. - **B**: Commodity swaps are usually cash-settled. - **C**: The notional amount itself is not physically exchanged.
Author: Manit Arora
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Q-178.5. With respect to a generic commodity swap, EACH of the following is true EXCEPT:
A
A commodity swap is effectively a series of forward contracts on a commodity with different maturity dates and the same delivery prices
B
A Commodity swap is financially settled and does not involve any physical delivery
C
Like a vanilla interest rate swap, notional is not exchanged
D
Unlike a vanilla interest rate swap, exchanged payments are NOT netted
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