Types Of Swap Agreement

Legs can be almost anything, but usually a leg includes cash flows based on fictitious capital that both parties agree with. This principle generally does not change ownership during or at the end of the swap; This contrasts with a future, an attacker or an option. [3] The two main reasons for swapping are a better matching of the life of assets and liabilities and/or the achievement of cost reductions through the quality spread differential (QSD). Empirical evidence indicates that the spread between A-rated commercial paper (floating) and A-rated commercial paper is slightly lower than that between a five-year commitment rated AAA (fixed) and a commitment with an A rating of the same duration.