Swap
Traditionally, the exchange of one security for another to change the maturity (bonds), quality of issues (stocks or bonds), or because investment objectives have changed. Recently, swaps have grown to include currency swaps and interest rate swaps. Investopedia Says:
If firms in separate countries have comparative advantages on interest rates, then a swap could benefit both firms. For example, one firm may have a lower fixed interest rate, while another has access to a lower floating interest rate. These firms could swap to take advantage of the lower rates. Related Terms:
Basis Rate Swap
Bond Swap
Commodity Swap
Credit Default Swap
Credit Support Annex
Currency Swap
Interest Rate Swap
Non Deliverable Swap - NDS
Total Return Swap
Variance Swap
Volatility Swap |