Filter by Categories
Accounting
Banking

Derivatives




Forward-Starting Interest Rate Swap


An interest rate swap that involves the future exchange of two series of cash flows. This swap allows hedgers to arrange a swap in advance, i.e., before it becomes actually required. It also helps borrowers and investors to alter cash flows in anticipation of future movements in interest rates or the yield curve. Furthermore, this swap can be used to convert a fixed interest rate to a floating interest rate, or to protect the holder against changes in interest rates until a fixed liability or asset is arranged, in which case the holder can offset it with another swap (mirror swap) or terminate it altogether.

It is also known as a forward interest rate swap.



ABC
Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
Watch on Youtube
Remember to read our privacy policy before submission of your comments or any suggestions. Please keep comments relevant, respectful, and as much concise as possible. By commenting you are required to follow our community guidelines.

Comments


    Leave Your Comment

    Your email address will not be published.*