Dictionary
- Interest
- The fee charged by a lender to a borrower for the use of borrowed money, usually expressed as an annual percentage of the principal.
- Interest Rate
- Interest per year divided by principal amount, expressed as a percentage.
- Interest Rate Swaps
- An exchange of interest payments on a specific principal amount. This is a counterparty agreement, and so can be standardized to the requirements of the parties involved. Often, an interest rate swap involves exchanging a fixed amount per payment period for a payment that is not fixed. In an interest rate swap, the principal amount is never exchanged, it is just a notional principal amount.
- Intermarket Spread Swap
- A swap transaction meant to capitalize on a yield discrepancy between bond market sectors.
- Intraday
- During a single trading day.