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Total Return Swap |
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Total Return Swap A swap in which the two legs are an interest rate, whether fixed or floating, and the return on a set asset. The second party owns the asset, which is usually a set of loans, bonds, or an equity index. The advantage to a total return swap for the payer of the interest rate is that it allows him/her to benefit from the ownership of the asset without owning it. However, if the asset falls in price over the life of the swap, the payer of the interest rate is required to compensate the owner of the asset for the amount the asset has lost. 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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