Zero Basis Risk Swap - ZEBRA

AAA

DEFINITION of 'Zero Basis Risk Swap - ZEBRA'

A swap agreement between a municipality and a financial intermediary.

Also known as a "perfect swap" or "actual rate swap".

INVESTOPEDIA EXPLAINS 'Zero Basis Risk Swap - ZEBRA'

The municipality pays a fixed rate of interest to the financial intermediary and receives a floating rate of interest in return. The floating rate received is equal to the floating rate on the outstanding floating rate debt initially issued by the municipality to the public.

RELATED TERMS
  1. Arbitrage

    The simultaneous purchase and sale of an asset in order to profit ...
  2. Arbitrage Bond

    A debt security with a lower interest rate issued by a municipality ...
  3. Basis Rate Swap

    A type of swap in which two parties swap variable interest rates ...
  4. Financial Intermediary

    An entity that acts as the middleman between two parties in a ...
  5. Floater

    A bond or other type of debt whose coupon rate changes with market ...
  6. Swap

    Traditionally, the exchange of one security for another to change ...
Related Articles
  1. Careers In The Derivatives Market
    Options & Futures

    Careers In The Derivatives Market

  2. Are High-Yield Bonds Too Risky?
    Bonds & Fixed Income

    Are High-Yield Bonds Too Risky?

  3. Are Derivatives Safe For Retail Investors?
    Options & Futures

    Are Derivatives Safe For Retail Investors?

  4. An Introduction To Swaps
    Options & Futures

    An Introduction To Swaps

Hot Definitions
  1. Debit Spread

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

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center