Defnition of 'Swap'

Traditionally, the exchange of one security for another to change the maturity
(bonds), quality of issues (stocks or bonds), or because investment objectives have
changed. Recently, swas have grown to include currency swas and interest rate
swas.
!f "rms in searate countries have comarative advantages on interest rates, then a
swa could bene"t both "rms. #or examle, one "rm may have a lower "xed
interest rate, while another has access to a lower $oating interest rate. These "rms
could swa to take advantage of the lower rates.