Finance

Warrant Bond

November 23, 2022
Derivatives

Interest Rate Caption

November 23, 2022

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A swap agreement 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 zebra basis risk swap is also called a perfect swap, a zero basis risk swap, and an actual rate swap.

 

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