Swaps Flashcards
1
Q
Swaps def
A
Agreement to exchange one set of cash flows for another
OTC Products
Legs of swaps known as cash flows
2
Q
Two types of Swaps referenced
A
- Interest Rate Swaps
- Credit Default swaps
3
Q
Interest Rate Swaps
A
Swap interest rate on loans
OTC agreement
Companies purchase so they can hedge
4
Q
Credit Default Swaps
A
Insurance on bonds
Protect holder from possible default of a bond
Swap Bank payout should default occur
