Interest rate swaps - used globally by both corporate finance departments and investment portfolios - constitute a growing $1.9 trillion market. Now, financial personnel, swap traders, corporate treasurers, and professional cash managers can turn to this guide to master all the methodologies used in the international swap market. Written for anyone whose work is touched by swap market activity, the guide uses diagramming techniques to first explain what swaps are and how and why they are traded. It then addresses more sophisticated financial transactions, such as rate setting, analysis of swap desks, market-to-market speculating, and financial statements. Readers will find detailed coverage of more than two dozen derivative products, including spreadlocks, swaptions, caps, and flows, and learn how swap trading works in foreign currencies and interest rates. Critical light is also shed on questions regulators are currently raising about the security and future of the swap markets.

Table of Contents

What is a SWAP? History of the SWAP Market. How Rates are Set. Financial Institutions and Credit. Executing a SWAP. Accounting and Financial Statement Considerations. Unwinding a SWAP. Some Refinements in SWAP Pricing. Hedging vs. Speculation. Other Derivative Products. Other Types of Interest Rate SWAPS. Other Types of SWAPS. Future of the SWAP Market.