Derivatives · glossary
A second contract whose payments move the opposite way to the first. Laid over a floating-rate loan, a swap fixes the cost: it removes the rises and the falls. It works only while its notional, dates, rate and floor match the loan. Chapter 1
Explained in Chapter 1, What a Derivative Is, of Derivatives.
A hedge is a second contract whose payments move the opposite way to the first. Atlas's loan costs more when EURIBOR rises, so Atlas wants a contract that pays it more when EURIBOR rises. Laid over the loan, the total cost then stands still.Read Chapter 1, What a Derivative Is →
Chapter 1 and this glossary are open to everyone; the whole edition is free to read with a free account until 31 January, and it stays open to an account opened by then.Chapter 1 of Derivatives and this glossary are free to read; the rest of the edition is in the Library, at €12 a month or €79 for a Year Pass.
Related terms
Where this term lives
This term is part of one complete fictional deal, with every document attached and a test after every chapter. Open Derivatives → · All terms A–Z →