Forward Swap

A swap agreement created through the synthesis of two swaps differing in duration for the purpose of fulfilling the specific time-frame needs of an investor. Also referred to as a "forward start swap," "delayed start swap," and a "deferred start swap."

For example, if an investor wants to hedge for a five-year duration beginning one year from today, this investor can enter into both a one-year and six-year swap, creating the forward swap that meets the needs of his or her portfolio. Sometimes swaps don't perfectly match the needs of investors wishing to hedge certain risks.


Investment dictionary. . 2012.

Look at other dictionaries:

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