A swap changes the cash-flow exposure of a borrowing or investment without necessarily changing the underlying asset. This lesson calculates a fixed-for-floating payment and distinguishes interest-rate, currency and equity swaps. It uses the timing ideas from forwards and explains why collateral matters even when principal is not exchanged.
In this lesson
- Learning objectives
- Interest-rate swaps
- Currency and equity swaps
- Net the two payments at the same date
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