Swap

What Does Swap Mean?

Traditionally, the exchange of one security for another to change the maturity (bonds), quality of
issues (stocks or bonds), or because investment objectives have changed. Recently, swaps have
grown to include currency swaps and interest rate swaps.

Investopedia explains Swap

If firms in separate countries have comparative advantages on interest rates, then a swap could
benefit both firms. For example, one firm may have a lower fixed interest rate, while another has
access to a lower floating interest rate. These firms could swap to take advantage of the lower
rates.