PowerPoint Presentation

Interest Rate Hedging Products Explained by:

What are Interest Rate Hedging Products

?

Interest Rate Hedging Products

Interest Rate Hedging Products are financial contracts between a customer and a financial institution and usually take the form of either a Swap, Cap or Collar.

What is a Swap

?

Interest Rate Swaps

A Swap is an agreement between two parties in which one type of interest payment is swapped for another. E.g. Swapping a fixed rate payment for a floating payment.

What is a Cap

?

Caps

A Cap places a limit or ceiling on any interest rate rises.

Interest rates cannot rise above a certain level

What is a Collar

?

Collar

A Collar enables the customer to limit interest rates to within a simple range.

In this case there will be both ceiling and Floor Limits

For more information on Interest Rate Hedging Products visit:

mkblaw.co.uk