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.
BREAKING DOWN '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.

Putable Swap
An exchange of cash flows in which one counterparty makes payments ... 
Swap Rate
The rate of the fixed portion of a swap as determined by its ... 
Asset Swap
Similar in structure to a plain vanilla swap, the key difference ... 
Payer
An entity that makes a payment to another. While the term payer ... 
FixedForFloating Swap
An advantageous arrangement between two parties (counterparties), ... 
Interest Rate Swap
An agreement between two parties (known as counterparties) where ...

Markets
What's an Interest Rate Swap?
An interest rate swap is an exchange of future interest receipts. Essentially, one stream of future interest payments is exchanged for another, based on a specified principal amount. 
Investing
How Are Interest Rate Swaps Valued?
When trading in financial markets, higher returns are generally associated with higher risk. Hedge your risk with interest rate swaps. 
Investing
Interest Rate Swaps Explained
Plain interest rate swaps that enable the parties involved to exchange fixed and floating cash flows. 
Trading
An InDepth Look At The Swap Market
The swap market plays an important role in the global financial marketplace; find out what you need to know about it. 
Trading
An Introduction To Swaps
Learn how these derivatives work and how companies can benefit from them. 
Investing
Different Types of Swaps
Investopedia explores the most common types of swap contracts. 
Trading
Managing Interest Rate Risk
Interest rate risk stems from the possibility that an interestbearing assetâ€™s value will change due to changing interest rates. 
Trading
Hedging With Currency Swaps
The wrong currency movement can crush positive portfolio returns. Find out how to hedge against it. 
Markets
The FastPaced World of Libor & Fixed Income Arbitrage
LIBOR is an essential part of implementing the swap spread arbitrage strategy for fixed income arbitrage. Here is a stepbystep explanation of how it works. 
Personal Finance
Try This HomeEquityLineofCredit Hybrid
This product is essentially a homeequity loan and home equity line of credit (HELOC) hybrid, and it has its own quirks, benefits and drawbacks.

Do interest rate swaps trade on the open market?
Learn how interest rate swaps are traded on the OTC and interbank markets, and how these swaps can be used to arbitrage different ... Read Answer >> 
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 Answer >> 
What are interest rate swaps on the OTC market?
Learn about interest rate swaps and how they are traded over the counter, and understand the impact of DoddFrank on swaps ... Read Answer >> 
What would motivate an entity to enter into a swap agreement?
Learn why parties enter into swap agreements to hedge their risks, and understand how the different legs of a swap agreement ... Read 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 Answer >> 
Can bond traders trade on interest rate swaps?
Read about interest rate swaps and why these transactions are performed by institutional actors in the bond market, not individual ... Read Answer >>