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Understanding Swaps: Types and Examples by Gudikandula Ravinder is a document available to read on EtoBox.
An interest rate swap is an agreement between two parties to exchange interest rate cash flows, usually based on a notional principal amount. In a "plain vanilla" swap, one party pays a fixed rate of interest while the other pays a floating rate, typically LIBOR. This allows parties to essentially swap fixed and floating rate debt. An example is provided where a company and bank enter into a swap that saves them a combined 1.25% on their borrowing costs. The swap bank facilitates the transaction and profits
- Author
- Gudikandula Ravinder
- Language
- EN