A financial transaction in which two counterparties agree to exchange fixed flows for floating interest flows for a set period of time on an agreed notional principal. e.g. counterparty A pays a fixed rate to counterparty B and Counterparty B pays a floating rate to counterparty A. The swap allows a counterparty to change the interest basis on which an underlying loan or asset (See Asset Swap) is based. See Currency Swap.
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