Derivatives

Best-Of Option

September 1, 2020
Accounting

Impairment Loss

September 2, 2020

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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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