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Mahesh Kumar Sarva, Lovely Professional University                 Unit 9: Interest Rate and Currency Swaps





                     Unit 9: Interest Rate and Currency Swaps                                   Notes


             CONTENTS
             Objectives
             Introduction

             9.1  Conceptual View of Swaps
                 9.1.1  Development of Parallel Loans
                 9.1.2  Back-to-back Loans

             9.2  Problems with Parallel and Back-to-back Loans
             9.3  Terminology Related to Swaps
                 9.3.1   Reasons for Growth of Swap Market
                 9.3.2   Limitations of Swap Market
                 9.3.3   Swap Market Terminology

             9.4  Interest Rate Swaps
                 9.4.1   Characteristics of Interest Rate Swaps
                 9.4.2  Plain Vanilla Interest Rate Swaps

                 9.4.3   Types of Interest Rate Swaps
                 9.4.4   Interest Rate Swaps – The Indian Scenario
             9.5  Currency Swaps
                 9.5.1   Various Forms of Currency Swaps
             9.6  Summary

             9.7  Keywords
             9.8  Review Questions
             9.9  Further Readings


          Objectives

          After studying this unit, you will be able to:

               Explain the concept of Swaps
               Discuss the problems with parallel and back-to-back loans
               Discuss the terminology related to Swaps
               Describe interest rate Swaps

               Discuss the concept of currency Swaps
               Explain the various forms of currency Swaps








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