DEFINITION of 'Fixed Price'
The leg of a swap that is based on an unchanging interest rate. A plain vanilla interest rate swap is an exchange of two streams of cash flows. Both streams are based on the same amount of notional principal, but one stream pays interest on that notional principal at a fixed rate (or fixed price) and one stream pays interest on the notional principal at a floating rate (or floating price).
BREAKING DOWN 'Fixed Price'
The fixedrate stream does not change for the duration of the swap, while the floating rate stream changes periodically over the duration of the swap as its benchmark interest rate, often LIBOR, changes in accordance with market conditions. Two parties, called counterparties, enter into such transactions to reduce their exposure to changes in interest rates or to attempt to profit from changes in interest rates.

Notional Principal Amount
In an interest rate swap, the predetermined dollar amounts on ... 
Amortizing Swap
An exchange of cash flows, one of which pays a fixed rate of ... 
Asset Swap
Similar in structure to a plain vanilla swap, the key difference ... 
Reversible Swap
An exchange of cash flows that allows one counterparty to use ... 
Delayed Rate Setting Swap
An exchange of cash flows, one of which is based on a fixed interest ... 
Inflation Swap
A derivative used to transfer inflation risk from one party to ...

Trading Strategies
Interest Rate Swaps Explained
Plain interest rate swaps that enable the parties involved to exchange fixed and floating cash flows. 
Investing
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 Basics
Different Types of Swaps
Investopedia explores the most common types of swap contracts. 
Investing Basics
Managing Interest Rate Risk
Interest rate risk stems from the possibility that an interestbearing assetâ€™s value will change due to changing interest rates. 
Investing
How To Read Interest Rate Swap Quotes
Puzzled by interest rate swap quotes terminology? Investopedia explains how to read the interest rate swap quotes 
Forex Education
Currency Swap Basics
Find out what makes currency swaps unique and slightly more complicated than other types of swaps. 
Forex Education
Hedging With Currency Swaps
The wrong currency movement can crush positive portfolio returns. Find out how to hedge against it. 
Options & Futures
Managing Interest Rate Risk
Learn which tools you need to manage the risk that comes with changing rates. 
Investing
What Warren Buffet Calls "Weapons of Mass Destruction": Understanding the Swap Industry
A full analysis of how the swap industry works. 
Trading Systems & Software
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.

What does the notional principal of a derivative contract refer to?
Find out more about the notional principal amount, interest rate swap agreements and how the notional principal amount in ... 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 >> 
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 >> 
Can individual investors profit from interest rate swaps?
Find out how individual investors can speculate on interest rate movements through interest rate swaps by trading fixed rate ... Read Answer >> 
How does an entrepreneur choose a business structure?
Learn more about interest rate swaps and currency swaps, how these swaps are used and the difference between interest rate ... 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 >>