cRYPTO Glossary

An asset swap is a financial transaction where one asset is exchanged or swapped for another asset for various purposes.

Explanation of Specific Terms:

• Financial transaction: A formal agreement or exchange involving financial instruments, assets, or securities.
• Swapped assets: The assets involved in the transaction, which may include bonds, securities, loans, or other financial instruments.
• Various purposes: Asset swaps can be executed for reasons such as adjusting risk exposure, achieving specific investment objectives, managing liquidity, or optimizing the portfolio's yield or cash flow.

Key Points for Beginners:

• Types of asset swaps: Common types include bond-for-bond swaps, where fixed-rate bonds are exchanged for floating-rate bonds, or currency swaps, where debt in one currency is exchanged for debt in another.
• Execution: Asset swaps typically involve counterparties agreeing on terms such as the type and quality of assets exchanged, the duration of the swap, and any associated costs or fees.
• Risk management: Asset swaps can help investors or institutions tailor their portfolios to meet specific risk preferences, hedging against interest rate fluctuations, currency risks, or market volatility.