When a party enters into a swap contract it agrees to

Question

Quizplus · Accepted Answer

When a party enters into a swap contract, they agree to exchange one set of payments for another. This can be a swap of fixed interest rate payments for floating interest rate payments, or vice versa. It can also involve swapping payments in different currencies or swapping payments based on different underlying assets. However, the basic idea is always that one set of payments is exchanged for another. The other options listed - exchanging principals on loans, swapping loans with different maturities, or swapping debt for equity - are different types of financial transactions that are not necessarily covered by a swap contract.

When a Party Enters into a Swap Contract It Agrees