2. Origin of swaps
Swaps market can traced
to the late 1970, British
controls on the movement
of foreign currency. The
1st interest rate swap
occurred in
1981agrement b/w IBM &
World Bank.

3. An interest rate swap
is a contractual
agreement entered
into b/w two
counterparties under
which each agrees to
make periodic
payment to the other
for an agreed period
of time

5. 1.Basis swaps
2.Forward swaps
3.Rate capped swaps
4.Deferred rate swaps
5.Callable swaps

7. LIBOR goes up and down

8. Scenario A: LIBOR = 0.25%
 Charlie:-
($1,000,000 x (0.25% + 1%)) $12,500
 Sandy :-
($1,000,000 x 1.5%) $15,000
Sandy owes Charlie the difference: $2,500.

10.  Scenario B: LIBOR = 1.0%
 Charlie :-
($1,00,000 x (1% + 1%)) $20,000
 Sandy:-
($1,000,000 x 1.5%) $15,000
Charlie owes Sandy the difference : $5,000.

12. Interest rate swaps provide a way for
businesses to hedge their exposure to
changes in interest rates.

13. UR’S
MANJUNATH
THANQ U….
INTEREST:- You only do it when
it’s CONVENIET
COMMIT:- No excuses, only RESULTS