A swap is a variation of a forward contract that is esentially equivalent to a series of forward contracts.
A swap is an agreement between 2 parties to exchange a series of future cash flows. Typically at least one of the 2 series of cash flows is determined by a later outcome.
One party agrees to pay the other a series of cash flows whose value will be determined by the unknown future course of some underlying factor, such as interest rate, exchange rate, stock price or commodity price.
Swap payments can be fixed or floating (variable).
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