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What are "Interest Rate Swaps"?

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تم إضافة السؤال من قبل Abdul Rehman Zaheer , Marketing & Projects Specialist , King Fahd University of Petroleum & Minerals
تاريخ النشر: 2014/04/04
Swarnendu Ganguly
من قبل Swarnendu Ganguly , Area Sales Manager (AVP) , Indusind Bank Ltd

swapping of the interest rates relate to the switch over from X rate prevalent in A country to Y rate in B country to take benefit of the swings in the forex markets and other related factors.

Mujtaba Hussain
من قبل Mujtaba Hussain , Accounts officer , Miraj Entertaiments

An interest rate swap is an agreement between two parties to exchange one stream of interest payments for another, over a set period of time. Swaps are derivative contracts and trade over-the-counter.

 

The most commonly traded and most liquid interest rate swaps are known as “vanilla” swaps, which exchange fixed-rate payments for floating-rate payments based on LIBOR, the interest rate high-credit quality banks (AA-rated or above) charge one another for short-term financing. LIBOR, “The London Inter-Bank Offered Rate,” is the benchmark for floating short-term interest rates and is set daily.) Although there are other types of interest rate swaps, such as those that trade one floating rate for another, plain vanilla swaps comprise the vast majority of the market.

Divyesh Patel
من قبل Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town

An interest rate swap is a financial derivative that companies use to exchange interest rate payments with each other.

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