Agreement in which two parties agree to exchange

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Reference no: EM131211332

A swap is an agreement in which two parties agree to exchange (swap) something, generally obligations to make specific payment streams. Most swaps today involve either interest payments (e.g., exchanging fixed rate payments for floating rate payments to create more sensitivity to interest rate changes) or currencies. Swaps can be used to hedge financial risks Please, explain Hedging with Futures (contracts) as it applies to financial risk.

Reference no: EM131211332

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