Where this is not true, an arbitrageur might likewise short sell the overpriced instrument, and utilize the profits to purchase the properly priced instrument, pocket the distinction, and then use payments created to service the instrument which he is short. While primary payments are not exchanged in a rate of interest swap, assuming that these are received and paid at the end of the swap does not change its worth. Hence, from the viewpoint of the floating-rate payer, a swap is equivalent…