The benefit of entering a swaps contract often includes:

The ability to hedge financial risk is a primary benefit of entering into a swaps contract. Swaps allow parties to exchange cash flows or other financial instruments to manage or mitigate various types of risk, such as interest rate risk or currency risk. For instance, a company holding a variable-rate loan may enter into an interest rate swap to exchange its variable payments for fixed payments, thus stabilizing its interest expenses and protecting against rising interest rates. This capability to match financial exposure with desired risk profiles is a significant advantage for organizations looking to enhance their financial management.

In contrast, other options like increased transaction costs do not represent a benefit, as swaps typically aim to optimize costs and mitigate risk rather than increase them. Shortening the duration of debt can be achieved through other means, and while swaps may influence cash flows, they do not inherently shorten debt duration. The concept of obtaining enhanced seniority over equity investors does not relate to swaps; swaps deal with the exchange of cash flows or specific financial terms rather than modifying the capital structure or hierarchy of claims in a company's capital.