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Perfect Swap


A swap agreement that is made between a municipality (a city or town local council) and a financial intermediary, in which the former is 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 perfect swap is also called a zero basis risk swap, a zebra swap, or an actual rate 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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