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 ... 
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 ... 
Currency Swap
A swap that involves the exchange of principal and interest in ... 
Reversible Swap
An exchange of cash flows that allows one counterparty to use ...

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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 >>