Where this is not true, an arbitrageur could likewise short sell the overpriced instrument, and use the proceeds to acquire the properly priced instrument, pocket the difference, and then use payments produced to service the instrument which he is short. While primary payments are not exchanged in a rates of interest swap, assuming that these are received and paid at the end of the swap does not change its worth. Therefore, from the point of view of the floating-rate payer, a swap is…