Warning

Info

Warning

Info

Warning

Info

LSDefine

Simple English definitions for legal terms

interest-rate swap

Read a random definition: summary eviction

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
JumpySubsequentDolphin
20:51
@SplitterusClitterus: HAHAH yes
ur user is hilarioussss and no i just graduated this may and am now applying ---also im out of messages so ill take a lil
20:52
roger dat. see u in heck
im back, r u applying this cycle too
JumpySubsequentDolphin
21:32
this child fell asleep on me
JumpySubsequentDolphin
21:32
im so uncomfortable
just push him off the entire seat
JumpySubsequentDolphin
21:34
LMAOOOO
JumpySubsequentDolphin
21:35
no he’s literally like 8 and he fully just put his head on my bicep and slept
JumpySubsequentDolphin
21:35
he has since moved
22:12
@SplitterusClitterus: me yesterday
gulc baby pls text me back... i miss you ...... :(
22:23
i just went into a discord vc and yelled "YALL I JUST GOT INTO J.M. SCHOOL OF LAW"
22:24
people were getting excited :sob:
22:25
then someone was like "what does jm stand for" and i was like .. well
AHHAHAHAHAHAHHAHAHAHAHAHAH
@JumpySubsequentDolphin: wait this is so cute, also where r u going
JOE MBIDEN
JumpySubsequentDolphin
22:39
@splitty Oregon!
oh yay for what thats so random
JumpySubsequentDolphin
22:45
haha my brother and sister in law live there
so cutie oregon is beatiful
soyalmondoatmilk
8:38
good morning! hoping waves will come our wave today
8:42
GW wave today?
8:57
There’s someone I found on here with the username threeoutchange and if my understanding is correct that’s a reference to the debut album by a pretty cool 90s-00s Japanese band called Supercar. I geeked a little
8:57
It could just be a baseball reference I don’t get though lol
Dkk
9:00
@renard99: also, the same band that does a song in the anime Eureka 7 which I watched when I was like idk, 12
9:00
Yeah! They are pretty good. Three Out Change is an awesome J-rock record
Dkk
9:01
I will probably not listen to them more but fun fact. Really random to start the day. An omen that the waves will be very random today.
LSD+ is ad-free, with DMs, discounts, case briefs & more.