Rollercoaster Swap

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Replacement Swap

    A substitute for a swap arrangement that is terminated before ...
  2. Accreting Principal Swap

    A derivative where counterparties exchange financial instrument ...
  3. Index Amortizing Swap - IAS

    An interest rate swap where the notional principal amount declines ...
  4. Swap

    Traditionally, the exchange of one security for another to change ...
  5. Cash-And-Carry Trade

    A trading strategy in which an investor buys a long position ...
  6. Collateralized Loan Obligation ...

    A security backed by a pool of debt, often low-rated corporate ...
Related Articles
  1. Options & Futures

    An Introduction To Swaps

  2. Active Trading

    How Companies Use Derivatives To Hedge ...

  3. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

  4. Investing

    How do I use a rollercoaster swap?

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center