foreign currency swaps

Question 1

What is a ‘swap agreement’?

Answer 1

An OTC agreement between two companies to exchange (types of) cash flows in the future

Question 2

what are the typical conditions for an interest rate swap

Answer 2

one company pays a predetermined fixed ir…
…on a (notional principal)
…for a predetermined no. of years

In return it receives a floating rate ir…
…on the (notional) principal
…for a predetermined no. of years

(typically) the start of the swap = ‘at the money’ (fixed ir cashflow = floating ir cashflow)