Final answer:
For a swap buyer, the value of a swap is calculated by discounting the future cash flows of fixed and floating legs to the present value using current interest rates.
Step-by-step explanation:
From the perspective of the swap buyer, the value of a swap is typically determined by comparing the present value of the expected future cash flows from the fixed and floating components of the swap. This involves discounting future cash flows to their present value, taking into account the current interest rate environment, potential capital gains, and dividends. As in the case of bonds, the present value of future cash flows can determine if a bond will sell for more or less than its face value depending on whether interest rates rise or fall after issuance.