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Swap
In general, the exchange of one asset or liability for a similar asset or liability for the purpose of lengthening or shortening maturities, or raising or lowering coupon rates, to maximise revenue or minimise financing costs. In securities, this may entail selling one issue and buying another in foreign currency, it may entail buying a currency on the spot market and simultaneously selling it forward. Swaps may also involve exchanging income flows; for example, exchanging the fixed rate coupon stream of a bond for a variable rate payment stream, or vice versa, while not swapping the principal component of the bond.
- Part of Speech: noun
- Synonym(s):
- Blossary:
- Industry/Domain: Financial services
- Category: Commodity exchange
- Company:
- Product:
- Acronym-Abbreviation:
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