Swap contracts??? (1 Viewer)

[Michaelmoo]

Does anyone have an understanding on what a "swap contract" is? Its a tool that applies to both hedging and derivatives. I read about it in Cambridge and on Wikipedia but their explanations are a little hazy (or is it me?)

If someone could clarify I'd appreciate it.

 

[the-derivative]

A swap contract is a contract between two parties that binds each party to pay periodic payments (such as payments on a bond), and receive periodic payments (such as payments on a bond).

To keep it simple it's an agreement between companies to swap bond payments. Also it's not on the syllabus.

 

[Michaelmoo]

A swap contract is a contract between two parties that binds each party to pay periodic payments (such as payments on a bond), and receive periodic payments (such as payments on a bond).

To keep it simple it's an agreement between companies to swap bond payments. Also it's not on the syllabus.

Hmm. It didn't really explain why they swap periodic payments. But thats ok I found the answer! Here it is: http://www.msrb.org/MSRB1/glossary/view_def.asp?param=INTERESTRATESWAPCONTRACT

O and it falls under derivatives. True you don't need anything extensive on it. You could mention it though, but I had to understand what it is.

Thanks.

BTW What did you score on your trial? You seem pretty good at business

 

[the-derivative]

Hmm. It didn't really explain why they swap periodic payments. But thats ok I found the answer! Here it is: http://www.msrb.org/MSRB1/glossary/view_def.asp?param=INTERESTRATESWAPCONTRACT

O and it falls under derivatives. True you don't need anything extensive on it. You could mention it though, but I had to understand what it is.

Thanks.

BTW What did you score on your trial? You seem pretty good at business

No problems, sorry I didn't fully answer your question.

Haha thanks. I got 95 in my trials - but I lost 4 marks because I ran out of time for the report and 1 on MC.

 

[Michaelmoo]

No problems, sorry I didn't fully answer your question.

Haha thanks. I got 95 in my trials - but I lost 4 marks because I ran out of time for the report and 1 on MC.

Good job and good luck with that state rank. Sure your capable.

 

[the-derivative]

Good job and good luck with that state rank. Sure your capable.

I'm not too sure about the state rank, but thanks anyway.
Best of luck for the 20th. =)

 

[yellowcake]

To keep it simple it's an agreement between companies to swap bond payments. Also it's not on the syllabus.

if it's not on the syllabus, will questions regarding swap contract appear later?

 

[lyounamu]

if it's not on the syllabus, will questions regarding swap contract appear later?

hmmm

swap contract is one type of derivate along with forwards/futures and option.

So it's technically part of the syllabus...

To answer your question, if it's not on syllabus, it is not supposed to be in exam.