What is a swap coupon?

swaps are a type of derivative or security supported by an asset where counter -patrons will arrange payments on the basis of fixed and floating interest rates paid at the specified intervals throughout the life of the contract. A zero coupon, based on a zero coupon coupon, changes interest so that the floating rate is paid from the interval, while the fixed rate is paid in one amount at the end of the contract. Alternative swap payments, including back and replaceable swaps of zero coupon, are possible. Swaps of coupons supported by currency have other payment arrangements based on inflation.

Standard swap agreements include two forms of interest and nominal director. The first party agrees with payments at the other side using a fixed interest rate based on the principal and will not change throughout the life of the contract. Floating interest payments, which are susceptible to the market fluctuations within the predefined range, are carried out at the same intervals by the other side.

In the case of a zero coupon, payments with a movable rate are still being made during the interval and are based on basic links to zero coupons. As a result, a fixed payment payment changes at the end of the contract, which allows the bond of zero coupon for a deep discount and does not pay any interest until it reaches maturity, which potentially causes the value of the bond. The traditional swap coupon exposes the risk to a side that applies floating payments, and the structure and the risk of such is a similar loan agreement. Swaps take place on an over -the -counter market where the parties are more vulnerable to non -price.

Alternative payment methods can be organized to minimize or transfer the risk. The one that places the payment with a fixed rate for the interval schedule, which makes the agreement more as a standard swap agreement, is referred to as Excangable Nulor Copon Swap. Another type is the swap reverse zero coupon, toTerý reduces the risk for the recipient of the floating interest because the payment plan with moving intervals is maintained, but the fixed rate payment is produced in advance. Swaps with zero inflation coupon are a similarly named investment agreement with a completely different operation method, because the underlying asset is the currency and the floating rate is based on inflation. Payments of fixed and floating rates are made once, at the end, based on the known level of inflation.