An equity swap involves the exchange of dividend payments for payments linked to the degree of change in a stock index.

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An equity swap typically involves the exchange of future cash flows between two parties, where one set of cash flows is generally based on a fixed interest rate, while the other is based on the return of an equity index, a specific stock, or a basket of stocks. It does not specifically involve the exchange of dividend payments for changes in a stock index, but rather the total return of equities (which can include dividends) for interest payments or the return of another asset.

An Equity Swap Involves the Exchange of Dividend Payments for Payments