What Is a Swap? A swap is a derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments. Most swaps involve cash flows based on a notional principal amount such as a loan or bond, although the instrument can be almost anything. Usually, the principal does not change hands. Each cash flow comprises
What Is a Swap Curve? A swap curve identifies the relationship between swap rates at varying maturities. A swap curve is effectively the name given to the swap’s equivalent of a yield curve. The yield curve and swap curve are of similar shape. However, there can be differences between the two. This difference, which can
What Is a Swap Rate? A swap rate is the rate of the fixed leg of a swap as determined by its particular market and the parties involved. In an interest rate swap, it is the fixed interest rate exchanged for a benchmark rate such as LIBOR or the Fed Funds Rate plus or minus
What Is a Swap Ratio? A swap ratio is a ratio at which an acquiring company will offer its own shares in exchange for the target company’s shares during a merger or acquisition. When two companies merge or when one company acquires another, the transaction does not have to be an outright purchase of the
What Is a Swap Spread? A swap spread is the difference between the fixed component of a given swap and the yield on a sovereign debt security with a similar maturity. In the U.S, the latter would be a U.S. Treasury security. Swaps themselves are derivative contracts to exchange fixed interest payments for floating rate
What Is Sweat Equity? The term sweat equity refers to a person or company’s contribution toward a business venture or other project. Sweat equity is generally not monetary and, in most cases, comes in the form of physical labor, mental effort, and time. Sweat equity is commonly found in real estate and the construction industry
What is a Sweep-To-Fill Order? A sweep-to-fill order is a type of market order in which a broker splits the order into numerous parts to take advantage of the order sizes at the best prices currently offered on the market. A sweep-to-fill order is executed immediately based on the best possible price and allows the
What Is Sweet Crude? Sweet crude refers to crude oil that is extracted that is found to contain very low amounts of sulfur. It is considered a valuable and efficient source of crude oil due to the fact that sulfur lowers the yield of various refined petroleum products such as gasoline, diesel fuel, and even
What Is a Sweetheart Deal? A sweetheart deal is an agreement of any type that generally consists of one party presenting another party with a proposal so attractive and potentially lucrative that it is difficult to turn down. Sweetheart deals tend to be secretive in nature and controversial. In many cases, they can be unethical
What Is the Society for Worldwide Interbank Financial Telecommunications (SWIFT)? Society for Worldwide Interbank Financial Telecommunications (SWIFT) is a member-owned cooperative providing secure messaging for international transfers of money between participating banks. Started in 1973 by 239 banks from 15 countries, SWIFT began providing messaging services in 1977. Its SWIFTnet messaging system lets banks share
