swaps

Swaps are financial agreements between two parties to exchange cash flows over a specified period. Typically, one party pays a fixed interest rate while the other pays a variable rate fluctuating with market conditions. This arrangement allows individuals or businesses to manage interest rate risk, speculate, or optimize their financial positions. For example, a company might swap fixed payments for lower variable payments if they anticipate interest rates will drop. Swaps can involve various assets, such as currencies or commodities, and are widely used in finance to achieve specific economic goals without exchanging the underlying assets themselves.