MANAGEMENT

Detailed explanation-1: -Swap contracts involve an underlying asset, which can be any legal commodity or financial instrument of value. It is usually the big businesses and financial institutions that enter into such contracts. However, swap transactions are not prevalent among retail investors.

Detailed explanation-2: -An asset swap is a derivative contract between two parties that swap fixed and floating assets. In an asset swap, an investor will pay a fixed rate to the bank and receive a floating rate in return. Asset swaps serve to hedge against different risks on the reference asset.

Detailed explanation-3: -The six primary types of swap agreements are interest rate, commodity, currency, credit default, hybrid, and debt-equity swaps.

Detailed explanation-4: -Typically, an asset swap involves transactions in which the investor acquires a bond position and then enters into an interest rate swap with the bank that sold them the bond. The investor pays fixed and receives floating. This transforms the fixed coupon of the bond into a LIBOR-based floating coupon.