Investor Glossary-zero basis risk swapInvestor Glossary-zero basis risk swapInvestor Glossary-zero basis risk swapInvestor Glossary-zero basis risk swapInsightful 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

Zero Basis Risk Swap

The HTML to link to this page
 

A zero basis risk swap, or ZEBRA, is a specialized type of swap for municipalities. The zero basis risk swap is an agreement between a municipality and a financial intermediary. Also known as "perfect swap" or "actual rate swap," a zero basis risk swap has the municipality pay out fixed interest and take in floating interest. The floating rate the municipality receives on zero basis risk swap equals the rate on public outstanding floating-rate debt already issued by the municipality that engages in the zero basis risk swap. Basis risk is the risk factor of uncorrelated hedging, and in a zero basis risk swap this risk is zero because the zero basis risk swap's risk is perfectly correlated by definition. A zero basis risk swap can help cities plan annual budgets without worrying about changes in interest rates.



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


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