TERM OF THE DAY swap Exchange of one type of asset, cash flow, investment, liability, or payment for another. Common types of swap include: (1) Currency swap: simultaneous buying and selling of a currency to convert debt principal from the lenders currency to the debtors currency. (2) Debt swap: exchange of a loan (usually to a third world country) between banks. (3) Debt to equity swap: exchange of a foreign debt (usually to a Third World country) for a stake in the debtor countrys national enterprises (such as power or water utilities). (4) Debt to debt swap: exchange of an existing liability into a new loan, usually with an extended payback period. (5) Interest rate swap: exchange of periodic interest payments between two parties (called counter parties) ... Learn more about this term Usage Example Completing a swap of currency, interest rates, assets or other types of payments can help reduce the financial risk that comes with market fluctuations and volatility
Posted on: Fri, 25 Apr 2014 19:22:25 +0000
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