Though there are several types of interest rate swaps (IRS), the most familiar type is known as fixed-for-floating. A notional amount of principle is used to calculate periodic fixed and floating interest payments. One of the counterparties receives fixed interest payments and pays out floating-rate interest to the other counterparty, who reciprocates by paying fixed and receiving floating. The floating rate can be pegged to three-month the U.S. Treasury bills, London Interbank Offer Rate (LIBOR), or any other well-established rate index. Continue reading “Termination of Interest Rate Swaps” »Click here for reuse options!
Copyright 2011 Eric Bank, Freelance Writer