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LIBOR Prime Swap


An interest rate swap that has two legs: 1) LIBOR-pay, prime-receive and 2) prime-pay, LIBOR receive. In other words, the buyer of the swap may seek to receive the prime rate over the term of the swap (swap term), and is willing to pay to the seller the LIBOR rate for the same term, or other way around, depending on his/ her risk profile and expected cash flows.



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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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