Category: INTEREST RATE SWAP

Interest Rate Swap Hedging Example

What is Hedging? Hedging is a process that investors use to protect their finances from any risks. In other words, hedging is the process that investors use to mitigate their risks. They do so to reduce the chances of losses or offset their assets against the losses. Hedging is also …

Interest Rate Swap Tax Treatment

Interest rate swaps are a primary type of hedging methods used by participants to mitigate their risks. With these swap contracts, participants can exchange their interest payments with another party to receive favourable terms in the future. There are several types of interest rate swaps that participants can use for …

What Is A Swap Rate?

What is a Swap Rate? A swap rate is a fixed rate that comes with swaps. The rate differs based on the parties involved in the contract and the market in which they transact. There are various types of swap rates, such as the interest rate swap or currency swap. …

Accounting for Interest Rate Swaps

What is an Interest Rate Swap? Interest rate swaps are an example of financial derivative contracts. With interest rate swaps, entities can exchange one source of interest payments with another. There is also another party that agrees to swap the stream with the entity. The interest rate swap occurs based …

Complex Derivative Linked to Constant Maturity Swap

Yonhap recently reported that South Korea’s investors appear to have lost money by investing in complex derivative products. The Financial Supervisory Service (FSS) said 3,654 individual investors and 188 businesses were found to have bought 822.4 billion won (US$677.8 million) worth of so-called “derivatives-linked fund” options sold by banks as …

Interest Rate Swap-Derivative Pricing in Excel

An interest rate swap (IRS) is a financial derivative instrument that involves an exchange of a fixed interest rate for a floating interest rate.  More specifically, An interest rate swap’s (IRS’s) effective description is a derivative contract, agreed between two counterparties, which specifies the nature of an exchange of payments …