What is a swap? - MoneyWeek investment tutorial

Investment tutorials from MoneyWeek.com, Visit the site or our youtube channel for more investment themes and tutorials.

In this video Tim Bennett explains what a financial swap is and how it affects your mortgage payments and interest rates.

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Category:

Education

Tags:

• finance
• banks
• investment
• swaps
• market
• tim
• bennett
• moneyweek
• educational
• business

[MoneyWeekVideos]

For a related video try "Has the Fed saved Europe". Tim.

[MoneyWeekVideos]

I will be putting something up on basic currency swaps soon in light of the Fed's latest liquidity move. Tim.

[MoneyWeekVideos]

Tommas099 - thanks for your comments. In fairness the example is designed to show a beginner the basic principles of a swap. All my numbers show is that a swaps bank can take advantage of the fact that different firms are able to borrow on different terms - my example is 100% theoretically sound but I accept the figures used are (quite deliberately) unrealistic in the I/R swaps market as I wanted to keep the basic principles as clear as possible. Tim.

[jyzmael1]

disculpo mi ignorancia por no saber hablar ingles!!pero si lo pudieran subtitular estaria agredecido de poder aprender mas como muchos de ustedes!!exitos para todos!!

[Mishkafofer]

@tommaso99 I new to swap term. I go a question. I don't see a contradiction, the swap deal is signed on specific date and during that date risk premium is the same, but after the deal is signed, everything can change. Do you mean that the fix interest should change all the time so that risk premium will equalize? In that case, why do a swap deal at all, if you are getting the same interest all the time.

[stalker1204]

i am interesdet in, wthat interdepence there is between LIBOR and fixed interest rate???

[kilmalkedar]

Thanks MoneyWeek Videos. A very clear explanation indeed. Along with la175z, I would love to see a video from you on currency swaps. Excellent work on your other videos too!

[la175z]

Could you also post a video explaining how a currency swaps work? Great video. Thumbs up!

[sourplum]

now i understand swap better. thanks

[especheg]

this tutorial is amazing, way much better than the explanation of my teacher.... thank u very much MoneyWeeKvideos

[Hulkmania316]

Great explanation. Now finally I understand swaps.