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Plain Vanilla Swap |
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Plain vanilla swap Plain Vanilla Swap A fixed-to-floating interest rate swap. The two legs of the swap are a fixed interest rate, e.g. 3.5%, and a floating interest rate, e.g. LIBOR + 0.5%. In such a swap, the only things traded are the two interest rates, which are calculated over a notional value. Each party pays the other at set intervals over the life of the swap. For example, one party may agree to pay the other a 3.5% interest rate calculated over a notional value of $1 million, while the second party may agree to pay LIBOR + 0.5% over the same notional value. See also: Swap. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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