Question

Meaning of swap and its type with example in simple terms

Answer 1

Swap refers to an exchange of one financial instrument for another between the parties concerned. This exchange takes place at a predetermined time, as specified in the contract. Description: Swaps are not exchange oriented and are traded over the counter, usually the dealing are oriented through banks.

Answer 2

$<b>$A swap is a derivative in which two counterparties exchange cash flows of one party's financial instrument for those of the other party's financial instrument. The benefits in question depend on the type of financial instruments involved. Consequently, swaps can be in cash or collateral.