Investor Glossary-swap transferring risk with participating elementInvestor Glossary-swap transferring risk with participating elementInvestor Glossary-swap transferring risk with participating elementInvestor Glossary-swap transferring risk with participating elementInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Swap Transferring Risk With Participating Element

The HTML to link to this page
 

A Swap Transferring Risk with Participating Element or STRIPE is a financial instrument that combines an interest rate cap with interest rate swaps. The swap transferring risk with participating element was designed to protect borrowers and lenders from fluctuations in interest rates. When a swap transferring risk with participating element arrangement is in place, the interest on a loan is divided evenly between a capped floating rate and a fixed rate. The fixed rate portion of a swap transferring risk with participating element gives borrowers some protection from rising rates, while the floating rate portion of a swap transferring risk with participating element gives them some benefit from falling rates. For lenders, the hedge effect is reversed; the fixed portion of a swap transferring risk with participating element protects them from falling rates, while the floating portion of a swap transferring risk with participating element lets them capture some additional profit from rising rates. Rather than charge a fee for a swap transferring risk with participating element agreement, lenders set the fixed rate part of the loan a little higher than what they would normally charge for a conventional interest rate swap.



Rate this Swap Transferring Risk With Participating Element definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: ex-dividend, debt service coverage, required rate of return, annual return, FTSE, margin rate, 1035 exchange, Key Rate Duration, FICO score, inflation, quality assurance, option premium, 1031 exchange, current ratio, minority interest, wholly-owned subsidiary, average price per share, phantom income, VIX, EBITDA, in escrow, risk management, diluted share, deferred tax, ex-dividend date, reverse mortgage, deferred revenue, cancelled check, real GDP, per diem, command economy, stock split, stock market close, Zero Cost Collar, dividends payable, class C shares, retained earnings, balance sheet, labor relations, liquidity ratio, APR, 144a, open position, covered put, implied volatility, limit order, 401a, LIBOR, irrevocable trust


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use