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WordNet-Online
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Definitions from the WebInterest Rate SwapDefinition: An interest rate swap is a financial derivative contract between two parties to exchange interest rate payments. The swap allows each party to obtain a different type or duration of interest rate exposure. It is commonly used to manage or hedge against interest rate fluctuations. Senses: Sense 1: Financial ContractInterest rate swap is a financial contract that involves the exchange of interest payments between two parties. Example: The bank entered into an interest rate swap with a hedge fund to hedge against the risk of rising interest rates. Sense 2: Hedging ToolInterest rate swap serves as a hedging tool to manage or mitigate exposure to interest rate fluctuations. Example: The corporation decided to enter into an interest rate swap to protect itself from potential interest rate increases. Sense 3: Interest Rate ExposureInterest rate swap allows each party to obtain a different type or duration of interest rate exposure. Example: A pension fund might enter into an interest rate swap to convert their fixed-rate bond into a floating-rate bond. Sense 4: Financial DerivativeInterest rate swap is a type of financial derivative that derives its value from the underlying interest rates. Example: The trader decided to invest in interest rate swaps as part of their diversified investment portfolio. Sense 5: Risk ManagementInterest rate swap is commonly used as a risk management tool by financial institutions and corporations. Example: The bank employed interest rate swaps to reduce its exposure to interest rate risks in its loan portfolio. Sense 6: Types of SwapsInterest rate swap is one of the various types of swaps, such as currency swaps, equity swaps, and commodity swaps. Example: The trader studied the different types of swaps available in the market, including interest rate swaps. Related Products on Amazon: | ||||
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