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Escalating Rate Swap


A variant on an off-market swap in which the fixed rate increases according to a predetermined schedule over the life of the swap. This swap is typically used by firms which face tight liquidity but, however, expect cash flows to improve later on.

The escalating rate swap is also known as a step-up swap or a step-up coupon 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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