Rollercoaster Swap


DEFINITION of 'Rollercoaster Swap'

A seasonal swap providing flexibility of payments at predetermined periods to best meet the counterparty's cyclical financing needs or other requirements.

BREAKING DOWN 'Rollercoaster Swap'

This swap has fluctuating payments so that the counterparty can match cash flows to transfers, periodic financing obligations or seasonal factors.

For example, an international company that sells lawn mowers might have a keen interest in a rollercoaster swap because it can match swap payments with the seasonal demand for lawn mowers.

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  1. 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 >>
  2. Can mutual funds invest in options and futures?

    Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
  3. How do futures contracts roll over?

    Traders roll over futures contracts to switch from the front month contract that is close to expiration to another contract ... Read Full Answer >>
  4. Why do companies enter into futures contracts?

    Different types of companies may enter into futures contracts for different purposes. The most common reason is to hedge ... Read Full Answer >>
  5. What does a futures contract cost?

    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>
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    The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >>

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