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Definition of swap?
Posted 01 January, 2010 by Jamir Sellers from United Arab EmiratesDear Ace, my name is Jamir Sellers from United Arab Emirates. I'm new at all this forex trading milieu, and i have a question to Your Excellency regarding something that i didn't grasp: what is swap?Capital Ace Answers:Traditionally, the exchange of one security for another to change the maturity (bonds), quality of issues (stocks or bonds), or because investment objectives have changed. recently, swaps have grown to include currency swaps and interest rate swaps. If firms in separate countries have comparative advantages on interest rates, then a swap could benefit both firms. For example, one firm may have a lower fixed interest rate, while another has access to a lower floating interest rate. These firms could swap to take advantage of the lower rates.'s an intriguing subject, Jamir. Swap is Traditionally, the exchange of one security for another to change the maturity (bonds), quality of issues (stocks or bonds), or because investment objectives have changed. Recently, swaps have grown to include currency swaps and interest rate swaps. If firms in separate countries have comparative advantages on interest rates, then a swap could benefit both firms. For example, one firm may have a lower fixed interest rate, while another has access to a lower floating interest rate. These firms could swap to take advantage of the lower rates.Go to
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