Monday, July 27, 2009

Eurodollar cross-currency interest rate swaps

the Eurodollar cross-currency interest rate swaps is a financial derivative that permits the holder of a floating interest rate investment or debt denominated in one currency to change it into a fixed-rate instrument is a second currency. It, of course, can also permit the holder of a fixed-rate debt in one currency to convert it to a floating-rate debt in a second currency. it thus links several segments of international capital markets. It has all the characteristics of a normal interest rate swap except that it is a combination of an interest rate swap and currency hedge.

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