Query Detail : SEBI Grade A Officer Phase II Paper 2 General Stream

Which is better for covering interest rate risks? Forward rate agreement or Interest rate swap?
CHIRAG,   May 12th 2020,  
SEBI Grade A Officer Phase II Paper 2 General Stream


Hi Chirag,
well depends on for how long one needs to use..forward rate agreement is like a single interest a rate swap... a swap is actually a series of forwards...so if a person want to hedge interest rate over a longer period then swaps are used and if only once then forwads is used
 
both purpose is same