What is 'Constant Maturity Swap  CMS'
Constant maturity swap (CMS) is a variation of the regular interest rate swap. In a constant maturity swap, the floating interest portion is reset periodically according to a fixed maturity market rate of a product with a duration extending beyond that of the swap's reset period.
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BREAKING DOWN 'Constant Maturity Swap  CMS'
Constant maturity swaps are exposed to changes in longterm interest rate movements. They are initially priced to reflect fixedrate products with maturities between two and five years in duration, but adjust with each reset period.
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