What is Swap?
Ans. Under it, a company agrees to pay a predetermined fixed rate on notional principal for a number of years and in return it receives interest at the same investment at floating rate on the same principal for same number of years. In other words, a swap is an agreement whereby two parties agree to exchange assets or sets of obligations or a series of cash flows for a given period of time at predetermined intervals. It includes spot as well as forward transactions.
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