DEFINITION of 'Extendable Swap'
An exchange of cash flows between two counterparties, one of whom pays interest at a fixed rate and one of whom pays interest at a floating rate, in which the fixedrate payer has the right to lengthen the term of the arrangement. The fixedrate payer might want to exercise its right to extend the swap if interest rates were rising because it would profit from continuing to pay a fixed, belowmarket rate of interest and receiving an increasing market rate of interest from the floating rate.
INVESTOPEDIA EXPLAINS 'Extendable Swap'
The additional feature of an extendable swap makes it more expensive than a plain vanilla interest rate swap. That is, the fixed rate payer will pay a higher fixed interest rate and possibly an extension fee. The opposite of an extendable swap is a cancelable swap, which gives one counterparty the right to terminate the agreement early.

Reverse Swap
An exchange of cash flow streams that undoes the effects of an ... 
Debt For Bond Swap
A debt swap involving the exchange of a new bond issue for similar ... 
Interest Rate Swap
An agreement between two parties (known as counterparties) where ... 
Forward Swap
A swap agreement created through the synthesis of two swaps differing ... 
Currency Swap
A swap that involves the exchange of principal and interest in ... 
Credit Default Swap  CDS
A swap designed to transfer the credit exposure of fixed income ...

What is an absolute rate?
An absolute rate is easy to understand once you know the basics of an interest rate swap. An absolute rate is the fixed rate ... Read Full Answer >> 
How do I use a rollercoaster swap?
A rollercoaster swap is the name for a swap (the exchange of one security for another) with a notional principal that differs ... Read Full Answer >> 
What is a "gypsy swap"?
A gypsy swap is a unique method by which a company may raise capital without issuing debt or holding a secondary offering. ... Read Full Answer >> 
How can I use an "airbag swap"?
An airbag swap is an interest rate swap designed to provide a cushion against rising interest rates. The airbag swap originally ... Read Full Answer >> 
How do companies benefit from interest rate and currency swaps?
An interest rate swap involves the exchange of cash flows between two parties based on interest payments for a particular ... Read Full Answer >>

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