Airbag Swap

Dictionary Says

Definition of 'Airbag Swap'

An interest rate swap whose notional value adjusts according to rising interest rates by indexing the floating portion to a constant maturity swap (CMS).
Investopedia Says

Investopedia explains 'Airbag Swap'

These swaps were created to hedge investments in areas where interest rate fluctuations have significant effects. Due to an increasing notional value, an asymmetrical payout schedule occurs whereby the swap's net payment with higher interest rates is greater than that occurring with lower interest rates.

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Related Definitions

  1. Constant Maturity Swap - CMS

    A variation of ...
  2. Interest Rate

    The amount ...
  3. Notional Principal Amount

    In an interest ...
  4. Notional Value

    The total value ...
  5. Swap

    Traditionally, ...
  6. Risk Capital

    Investment funds ...
  7. Futures Contract

    A contractual ...
  8. Futures

    A financial ...
  9. Hong Kong Stock Exchange (HKG) .HK

    One of the ...
  10. Cantor Futures Exchange

    An electronic, ...

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