Swaps

Dictionary meaning of swap is " to take part in exchange" or " to exchange one thing for another thing "

Swap is a Derivative instrument .It is one of the different types of derivatives.

Swap is a contract to exchange cashflows between two parties at an agreed rate .
Swaps are financial instruments to exchange cash flows. Swaps are based on interest rates, stock indices, foreign currencies.

Common types of Swaps are

1. Interest rate swap
2. Currency swap
3. Credit default swap
4. Commodity swap
5. Equity swap