Asset Swap
Similar in structure to a plain vanilla swap, the key difference is the underlying of the swap contract. Rather than regular fixed and floating loan interest rates being swapped, fixed and floating investments are being exchanged. Investopedia Says:
In a plain vanilla swap, a fixed libor is swapped for a floating libor. In an asset swap, a fixed investment such as a bond with guaranteed coupon payments is being swapped for a floating investment such as an index. Related Terms:
Commodity Swap
Coupon Bond
Currency Swap
Interest Rate
Interest Rate Swap
Libor
Swap
Total Return Swap
Underlying
Vanilla Option |