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, 11 December 2023→Fixed/floating swaps
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==== Fixed/floating swaps ==== | ==== Fixed/floating swaps ==== | ||
But are [[synthetic equity swap]] | {{Quote|{{Script|Nuncle}}: ’Tis none so mincey as a Farrington chop<br>And nowt so [[loansome]] as a fixed rate swap.<ref>Are you ''loansome'' tonight?</ref> | ||
:—{{buchstein}}, {{dsh}} | |||
}} | |||
But are [[synthetic equity swap]]s an odd use case? Aren't other swaps more bilateral, and less “lendy” in nature? What about interest rate swaps? Surely ''paying'' a fixed rate while ''receiving'' a floating rate has none of the characteristics of borrowership and loanery about it? | |||
The first point to make here is that in the real universe, ''fixed or floating rate cashflows do exist independently. They always come attached to an asset of some kind''. They are the ''return'' of an investment. In the normal, non swappist world, to get exposure to a rates is to buy a whole principal investment. If you want a floating rate, you put down a hundred bucks and buy a floating rate note. It was only once the [[Children of the Woods|Children of the Forest]] wrought their wristy magic on the [[First Men]] as they fought through the dark [[Bretton Woods|Woods of Bretton]] that the Ways of the [[Single agreement|Single Agreement]] came into common understanding. | The first point to make here is that in the real universe, ''fixed or floating rate cashflows do exist independently. They always come attached to an asset of some kind''. They are the ''return'' of an investment. In the normal, non swappist world, to get exposure to a rates is to buy a whole principal investment. If you want a floating rate, you put down a hundred bucks and buy a floating rate note. It was only once the [[Children of the Woods|Children of the Forest]] wrought their wristy magic on the [[First Men]] as they fought through the dark [[Bretton Woods|Woods of Bretton]] that the Ways of the [[Single agreement|Single Agreement]] came into common understanding. | ||