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Derivatives




Cocktail Swap


A combination of different types of swaps that aims to spread the risk associated with a sizable financing endeavor. For example, a cocktail swap could combine a currency swap and an interest rate swap, involving more than two counterparties, currencies and/ or interest rates. A bank may use a cocktail swap to balance its exposure to a set of exchange rates and interest rates while offsetting its inflows and outflows.



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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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