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Showing results for tags 'swaps'.
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When the interest rates payable are those of the day on which they are to be paid, it would potentially benefit investors who want to pay lower interest rates. In this case, if interest rates are falling, then the LIBOR in-arrears swap would be favourable to such investors.
In an inflation swap, there are two parties to the deal. One party transfers the inflation risk, and the other party assumes the inflation risk. One party's assets are linked to a price index and the other party's assets linked to cash flow (which could be fixed or floating).
The agreement value method has a provision for compensating a counterparty if they were not responsible for the premature end of the swap by making allowance for the use of a replacement swap. This replacement swap may provide different terms and conditions from the original swap to cater for changes in market conditions.
Fixed rates for the Non-Deliverable Swaps are based on the currency spot rates taken from the previous day. Multi-national transactions will require each country to enter into the contract using the commonly traded currency, and this allows emerging markets to enter into a greater number of transactions.