Which of the following types of swaps involves exchanged amounts based on interest rates?

An interest rate swap is a financial agreement between two parties to exchange interest payments on a specified principal amount over a predetermined period. In this type of swap, one party typically pays a fixed interest rate while the other pays a variable or floating interest rate, which is usually tied to an index like LIBOR (London Interbank Offered Rate). The primary aim of an interest rate swap is to manage interest rate risk or to speculate on changes in interest rate levels.

Interest rate swaps are commonly used by companies and financial institutions to adjust their exposure to interest rate fluctuations, convert fixed-rate liabilities to floating rates or vice versa, and manage cash flow interest payments effectively. The transactions typically involve no exchange of the principal amount, only the interest payments, which simplifies the mechanics of the swap.

Other types of swaps, such as currency swaps, involve exchanging cash flows in different currencies; commodity swaps are concerned with the price of commodities, and equity swaps involve exchanging cash flows based on stock index performances or equity returns, none of which are directly tied to interest rates in the manner that interest rate swaps are.