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Actual Rate Swap


A swap agreement that is made between a municipality (a city or town local council) and a financial intermediary, in which the former assumes the role of the fixed rate payer and the latter is the floating rate payer. However, the floating rate is (and must be) exactly equal to a floating rate liability on a municipal debt.

The actual rate swap is also called a perfect swap, a zero basis risk swap, or a zebra swap.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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