
Swaps 227
C H A P T E R S U M M A R Y
Swaps were developed for the purposes of hedging risks.
In comparison to forwards and futures, swap contracts have
longer maturity.
Swaps are over-the-counter contracts between private parties.
ese are facilitated by swap intermediaries.
In an interest rate swap, one party agrees to exchange interest
payments based on a xed interest rate with another party for
interest payments based on a oating rate.
In a currency swap, one party agrees to exchange payments
based on one currency with another party for payments based
in another currency. Currency swaps are interest rate swaps,