Coupon Accepted Successfully!


Other Types of Swaps


  • LIBOR is the most common floating rate in IRS; however there can be other floating rates like, commercial paper (CP) rates
  • In floating for floating swaps: rates of one type (LIBOR) can be swapped with floating rates of another type (CP)
  • In an amortizing swap the principal amount reduces in a predetermined amortization rate
  • In a step up swap the principal increases in a predetermined way
  • In Credit Default Swaps (CDS) the buyer of the swaps pays premium to the seller of the swap till the time the underlying does not default. If the underlying defaults then the seller of the swap makes a payment to the buyer and the CDS is terminated
  • In a compounding swap the interest on one or both sides is compounded forward to the end of the life of the swap and there is only one payment at the end of the contract
  • In a fixed for floating currency swap the fixed rate of interest in one currency is swapped for a floating rate of interest in another currency
  • An equity swap is an agreement to exchange the total returns (dividends and capital gains) from an equity index for a fixed/floating rate of interest
  • In a puttable swap one party has the option of terminating the contract early
  • Swaptions are options on swaps which provide one party with the right at a future time to enter into a swap where a predetermined fixed rate is exchanged for floating.


Test Your Skills Now!
Take a Quiz now
Reviewer Name