swap

verb
\ ˈswäp \
swapped; swapping

Definition of swap

 (Entry 1 of 2)

transitive verb

1a : to give in trade : barter
2 : to take turns in telling swap stories

intransitive verb

: to make an exchange

swap

noun

Definition of swap (Entry 2 of 2)

: an act, instance, or process of exchanging one thing for another

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Other Words from swap

Verb

swapper noun

Examples of swap in a Sentence

Verb

He swapped his cupcake for a candy bar. I swapped seats with my sister so she could see the stage better. I liked her blue notebook and she liked my red one, so we swapped.

Noun

They made the swap in secret. we made a swap: I'll do the dishes tonight and she'll do them for me tomorrow
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Recent Examples on the Web: Verb

Under a non-binding agreement signed in October, Glencore planned to swap its Rusal stake for En+ shares, boosting En+’s stake in the aluminum producer to nearly 57 percent. Bloomberg.com, "Mario Draghi Answers Questions at ECB News Conference," 25 Apr. 2018 Will women be penalized for staying single, and rewarded for swapping their careers for childbirth? Robert Foyle Hunwick, The New Republic, "How Do You Control 1.4 Billion People?," 25 Apr. 2018 An artificial intelligence has almost seamlessly stitched the familiar visages into pornographic scenes, one face swapped for another. Franklin Foer, The Atlantic, "The End of Reality," 8 Apr. 2018 In 2005, Apple’s biggest challenge in swapping chip designs was rewriting all of its software to operate better with Intel’s chips. Aaron Pressman, Fortune, "Why Apple May Dump Intel's Chips For Its Own," 3 Apr. 2018 The record company sent her to Europe to swap recorded music with record labels there. James R. Hagerty, WSJ, "Barbara Gardner Proctor Became a Role Model for African-American Women," 25 Jan. 2019 See photos of her look here: Here's hoping Foy and Colman meet up during the Golden Globes to take one seriously royal selfie—and maybe to swap a few tips on how to best portray the British monarch. Maggie Maloney, Town & Country, "Claire Foy and Olivia Colman Are Queens of the Golden Globe Red Carpet," 6 Jan. 2019 In this holiday-focused film, two women who look exactly alike (one a baker, one a duchess, both played by Vanessa Hudgens) decide to swap places with each other just before Christmas. Marilyn La Jeunesse, Teen Vogue, "The Best Christmas Movies to Watch According to Your Zodiac Sign," 26 Nov. 2018 Officials had to swap the ballots between the two locations. Megan Friedman, Harper's BAZAAR, "Voters Across the Country Are Running Into Issues at the Polls," 6 Nov. 2018

Recent Examples on the Web: Noun

The next day, the government bailed out insurance giant AIG, which in the run-up to the collapse had issued staggering amounts of credit-default swaps (CDSs), a form of insurance on MBSs. Jeff Andrews, Curbed, "10 years after the financial crisis, is the housing market still at risk?," 29 Aug. 2018 Such a deal for the Heat likely would have to be a Whiteside-plus-two swap, with a sweetener to both New Orleans and the team that takes Hassan. Ira Winderman, Sun-Sentinel.com, "ASK IRA: Could Heat have managed Whiteside-Spoelstra better?," 6 May 2018 In April, Paige Davis returns to TLC to host the revival of the neighbors’ room swap, Trading Spaces. Lauren Mccutcheon, Philly.com, "Paige Davis returns to 'Trading Spaces' and hits up Philadelphia Home + Garden Show," 12 Feb. 2018 Sergei Skripal, a former Russian intelligence officer, was convicted of spying for Britain before coming to the U.K. as part of a 2010 prisoner swap. Samuel Chamberlain, Fox News, "UK couple were poisoned by same nerve agent as ex-Russian spy, police say," 2 Oct. 2018 The tarot gowns from SS17 were the starting point for Ferragni's ball gown, which transformed into a mini dress for her after party with the swap of a skirt. Carrie Goldberg, Harper's BAZAAR, "Exclusive: Inside the Dior Atelier for the Making of Chiara Ferragni's 3 Wedding Dresses," 4 Sep. 2018 On some occasions, like in 2012, the conversations lingered only on the specific item of a prisoner swap. Alex Ward, Vox, "Why some experts are cautiously optimistic about peace talks with the Taliban," 3 Aug. 2018 At worst, especially with the high-profile director swap of Chris Miller and Phil Lord for Ron Howard last June, the worry was that the film could diminish some of the swagger of Harrison Ford's iconic character. Chris Thilk, The Hollywood Reporter, "How Disney's 'Solo: A Star Wars Story' Marketing Battled Franchise Saturation," 23 May 2018 Image Tuesday’s deal is essentially a swap of players to fill needs. New York Times, "Mets Trade Matt Harvey to Reds for Devin Mesoraco," 8 May 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'swap.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of swap

Verb

14th century, in the meaning defined at transitive sense 1a

Noun

1625, in the meaning defined above

History and Etymology for swap

Verb

Middle English swappen to strike; from the practice of striking hands in closing a business deal

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Statistics for swap

Last Updated

14 Feb 2019

Look-up Popularity

Time Traveler for swap

The first known use of swap was in the 14th century

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More Definitions for swap

swap

noun

Financial Definition of swap

What It Is

A swap is an agreement between two parties to exchange a series of future cash flows.

How It Works

Swaps are financial agreements to exchange cash flows. Swaps can be based on interest rates, stock indices, foreign currency exchange rates and even commodities prices.

Let's walk through an example of a plain vanilla swap, which is simply an interest rate swap in which one party pays a fixed interest rate and the other pays a floating interest rate.

The party paying the floating rate "leg" of the swap believes that interest rates will go down. If they do, the party's interest payments will go down as well.

The party paying the fixed rate "leg" of the swap doesn't want to take the chance that rates will increase, so they lock in their interest payments with a fixed rate.

Company XYZ issues $10 million in 15-year corporate bonds with a variable interest rate of LIBOR + 150 basis points. LIBOR is currently 3%, so Company XYZ pays bondholders 4.5%.

After selling the bonds, an analyst at Company XYZ decides there's reason to believe LIBOR will increase in the near term. Company XYZ doesn't want to be exposed to an increase in LIBOR, so it enters into a swap agreement with Investor ABC.

Company XYZ agrees to pay Investor ABC 4.58% on $10,000,000 each year for 15 years. Investor ABC agrees to pay Company XYZ LIBOR + 1.5% on $10,000,000 per year for 15 years.  Note that the floating rate payments that XYZ receives from ABC will always match the payments they need to make to their bondholders.

Investor ABC thinks that interest rates are going to go down. He is willing to accept fixed rates from Company XYZ

To do this, Company XYZ structures a swap of the future interest payments with an investor willing to buy the stream of interest payments at this variable rate and pay a fixed amount for each period.  At the time of the swap, the amount to be paid over the life of the debt is the same.


The investor is betting that the variable interest rate will go down, lowering his or her interest cost, but the interest payments from Company XYZ will be the same, allowing a gain (i.e. arbitrage) on the difference.

Why It Matters

Interest rate swaps have been one of the most successful derivatives ever introduced. They are widely used by corporations, financial institutions and governments.

According to the Bank for International Settlements (BIS), the notional principal of over-the-counter derivatives market was an astounding $615 trillion in the second half of 2009. Of that amount, swaps represented over $349 trillion of the total.

Source: Investing Answers

swap

verb

English Language Learners Definition of swap

 (Entry 1 of 2)

informal
: to give something to someone and receive something in return : to trade or exchange (things)
: to replace (something) with something else

swap

noun

English Language Learners Definition of swap (Entry 2 of 2)

: an act of giving or taking one thing in return for another thing : a trade or exchange

swap

verb
\ ˈswäp \
swapped; swapping

Kids Definition of swap

 (Entry 1 of 2)

: to give in exchange : make an exchange : trade

swap

noun

Kids Definition of swap (Entry 2 of 2)

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swap

noun
\ ˈswäp\

Legal Definition of swap

1 : an exchange of securities
2 : a derivative contract in which two parties (as corporations) agree to exchange rates especially relating to debt

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More from Merriam-Webster on swap

Rhyming Dictionary: Words that rhyme with swap

Thesaurus: All synonyms and antonyms for swap

Spanish Central: Translation of swap

Nglish: Translation of swap for Spanish Speakers

Britannica English: Translation of swap for Arabic Speakers

Comments on swap

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