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Tags: financial asset
Categories: Economics & Finance
An interest-rate swap is a transaction between two so-called counterparties in which fixed and floating interest-rate payments on a notional amount of principal are exchanged over a specified term. One counterparty pays interest at a fixed rate and receives interest at a floating rate (typically three-month Libor). The other pays interest at the floating rate and receives the fixed-rate payment. A swap can give both counterparties a lower cost of money than could be obtained from investors, at least initially.
(read more: http://www.thestreet.com/topic/47223/swaps.html)
