Warning

Info

Warning

Info

Warning

Info

LSDefine

Simple English definitions for legal terms

interest-rate swap

Read a random definition: outline form

A quick definition of interest-rate swap:

An interest-rate swap is an agreement between two parties to exchange interest payments or obligations. This is done to manage risk, speculate on interest-rate changes, or convert an instrument from a fixed to a floating rate or vice versa. The parties involved are called counterparties. In a plain-vanilla swap, one party pays a fixed interest rate while the other pays a floating interest rate based on the principal amount of the underlying debt. The notional amount of the swap, which is the underlying debt, does not change hands, only the interest payments are exchanged.

A more thorough explanation:

An interest-rate swap is an agreement between two parties to exchange interest receipts or interest-payment obligations. This is usually done to adjust one's risk exposure, speculate on interest-rate changes, or convert an instrument or obligation from a fixed to a floating rate or vice versa. The parties involved in this agreement are called "counterparties."

A plain-vanilla swap is a typical interest-rate swap that involves one counterparty paying a fixed interest rate while the other assumes a floating interest rate based on the amount of the principal of the underlying debt. The underlying debt, called the "notional" amount of the swap, does not change hands, only the interest payments are exchanged.

Company A has a loan with a fixed interest rate of 5%, while Company B has a loan with a floating interest rate based on the prime rate. Company A is concerned that interest rates may rise, while Company B is concerned that interest rates may fall. They enter into an interest-rate swap agreement where Company A pays Company B a fixed interest rate of 4%, and Company B pays Company A a floating interest rate based on the prime rate. This way, Company A can protect itself from rising interest rates, while Company B can protect itself from falling interest rates.

This example illustrates how an interest-rate swap can be used to adjust one's risk exposure and protect against potential losses due to interest-rate changes.

Interest on Lawyers' Trust Accounts | interest unity

Warning

Info

General

General chat about the legal profession.
main_chatroom
👍 Chat vibe: 0 👎
Help us make LSD better!
Tell us what's important to you
Dkk
18:41
@tgm Yeah sounds good, say that if they ask
18:47
hey yall
18:47
im premed idk why im here
18:48
we’re like cool and sexy and fun I get it
18:48
true i love ur user
18:49
thank you my little crow friend
Dkk
18:50
Med law easy done
medicine is a scam
join the ethically ambiguous legal field instead
Dkk
18:57
I want to meet an attorney that defends clients who run into flat earth problems. I want an attorney that knows and believes in flat earth theory.
19:05
i want a flat earther for president. i want a guy who posts on 4chan for president. i want someone who mogs for president.
Dkk
19:18
Exactly. My version of that awful poem.
Dkk
19:19
I can accept a president with maybe one or two of the poems traits hut good God, all of them??? No ty.
windyMagician
19:20
president who respects sex is crazy
windyMagician
19:20
we had bill clinton already
Dkk
19:21
Bill Clinton, first and last black president
windyMagician
19:23
I want to go running but my leg feels weird
windyMagician
19:23
it doesn't hurt its just tingly
Dkk
19:26
It needs more alcohol. You tingle when your nerves need watering.
19:27
try stretching it maybe to see what's up
windyMagician
19:27
stretches make me think it's just soreness
windyMagician
19:27
I'm sober lol
Dkk
19:38
Anyone else get the google notification that your LSD password has been compromised lol. LSD got hacked.
20:48
what.jpg @Dkk
CynicalOops
21:03
You think you just fell out of a coconut tree?
jackfrost11770
21:10
nope dk
CynicalOops
22:37
Calvinamala Harris
jackfrost11770
23:16
should i start using letterboxed again
LSD+ is ad-free, with DMs, discounts, case briefs & more.