Swap

Importance: 0.57

Is a company: no

Is a proper noun: no

Synonyms

  • trade
  • interchange
  • change
  • exchange
  • switch

Definition of Swap

  1. An agreement between two businesses to exchange commodities, payments or other financial products to reduce the risk of volatile market conditions or to obtain a better price or rate. For example, interest rate swaps, where floating rate interest is exchanged for fixed rate interest, protects a corporation against rises in rates or allows it to take advantage of a better rate. A cross-currency swap enables two parties to enter into an agreement in which one exchanges its currency for the other's to meet their separate requirements.

Related Terms and Acronyms

  • Loss Definition,
    • When expenses are larger than revenues.
  • Trade Equity Definition,
    • A swap of property, such as real estate or a car, as part of a down payment for other real estate.
  • Security Definition,
    • Property designated as collateral.
    • A tradable financial implement that represents ownership, the rights to ownership or debt.
    • A document stating ownership of a stock or bond.
  • Collusion Definition,
    • A secret, deceitful agreement by two or more parties to defraud others.
  • Profit Definition,
    • When revenues exceed expenses.
  • Derivatives Definition,
    • Financial contracts whose value is derived from the value of some underlying asset, rate or index. Derivatives are used as risk-management tools by governments and corporations to reduce exposure to risk, mainly related to fluctuations in foreign-exchange and interest rates. Derivative instruments include swaps, options, futures and forward contracts and are used by banks in two principal activities: sales/trading and asset/liability management.
  • Boot Definition,
    • Cash or other property used in an exchange to make the values of property traded equal. For instance, if you trade in a delivery truck on a new model, the cash you pay in addition to your old truck is boot.
  • Stock Definition,
    • A share of the ownership of a company.
  • Debt Definition,
    • Money one person or firm owes to another person or firm.
  • Exchange Definition,
    • A trade of property for other property or services. Like-kind property exchanges are a popular tax-deferral strategy.
  • Equity Definition,
    • The value of a property minus outstanding mortgage debt and other liens.
    • Ownership in an asset.
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