A security known as an interest-rate swap can be modeled as a portfolio consisting of either (i) a long position in a floating-rate bond and a short position in a fixed-rate bond (a payer swap) or (ii) a long position in a fixed-rate bond and a short position in a floating-rate bond (a receiver swap).2 Briefly explain: The price of the swap when the swap is created. How changes in the yield curve after the swap is created result in changes to the swap price. A security known as an interest-rate swap can be modeled as a portfolio consisting of either (i) a long position in a floating-rate bond and a short position in a fixed-rate bond (a payer swap) or (ii) a long position in a fixed-rate bond and a short position in a floating-rate bond (a receiver swap).2 Briefly explain: The price of the swap when the swap is created. How changes in the yield curve after the swap is created result in changes to the swap price. A security known as an interest-rate swap can be modeled as a portfolio consisting of either (i) a long position in a floating-rate bond and a short position in a fixed-rate bond (a payer swap) or (ii) a long position in a fixed-rate bond and a short position in a floating-rate bond (a receiver swap).2 Briefly explain: The price of the swap when the swap is created. How changes in the yield curve after the swap is created result in changes to the swap price.