Benefits of interest rate swaps, Financial Management

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Q. Benefits of Interest rate swaps?

Interest rate swaps may provide several benefits to companies including:

- The ability to get finance at a cheaper cost than would be possible by borrowing directly in the relevant market.

- The opportunity to efficiently restructure a company's capital profile without physically redeeming debt.

- Long-term hedging beside interest rate movements as swaps may be arranged for periods of several years.

- The ability to access a kind of finance which could not be accessed directly for instance because the borrower is relatively unknown in the market or has a relatively low credit rating.


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