swap

verb
\ ˈswäp How to pronounce swap (audio) \
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

Keep scrolling for more

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
See More
Recent Examples on the Web: Verb Whelan’s family recognizes the difficulty of trying to swap their brother for criminals such as Bout and Yaroshenko. Joel Gehrke, Washington Examiner, "Lawyer for US citizen jailed in Russia demands sanctions if client not released," 17 June 2020 Since March, the National Association of Secretaries of State elections committee has been holding a weekly call to swap information on preparing for an unprecedented election. Lissandra Villa, Time, "'We’re Not Going to Know Who the President Is Until Well Into November.' These Are the Scenarios Worrying Election Officials," 17 June 2020 Officials factored into both games, so would OSU fans swap a call against the Hurricanes for a call against the Tigers? Doug Lesmerises, cleveland, "If Clemson’s success vs. Ohio State is revenge for the Buckeyes beating Miami, is it worth it? Buckeye Take," 12 June 2020 But as the film unfolds, the characters start to swap traits and experiences. Anne Cohen, refinery29.com, "Shirley Isn’t A Biopic — It’s A Horror Story More Terrifying Than Haunting Of Hill House," 8 June 2020 Now, more than 11,000 members swap photos of food and restaurant tips. Alex Demarban, Anchorage Daily News, "Alaska has reopened, but many Anchorage restaurants and residents are still relying on to-go and delivery," 7 June 2020 In 18 months he is supposed to swap places with Mr Netanyahu. The Economist, "Empty empires Binyamin Netanyahu has bought loyalty with meaningless titles," 4 June 2020 Despite the auspicious timing, both U.S. and Iranian officials denied Asgari’s release was part of any prisoner swap. NBC News, "U.S. Navy veteran released from Iran," 4 June 2020 The creditors, which held $117 million of Pioneer’s debt, originally had agreed to swap senior notes for equity in the company. Randy Diamond, ExpressNews.com, "San Antonio’s Pioneer Energy comes out of bankruptcy — amid industry turmoil," 3 June 2020 Recent Examples on the Web: Noun The Fed has always been uncomfortable making quasi-diplomatic decisions about swap lines. The Economist, "Swapping panic for calm The successes of the Fed’s dollar-swap lines," 20 June 2020 And this swap is especially helpful for those who need to limit calories and carbs. Lisa Drayer, CNN, "Brownies, truffles and pasta: Healthful food swaps you will love," 11 June 2020 Although the amount of money involved is eye-watering, this sort of content swap is not unusual. Kate Knibbs, Wired, "Gone With the Wind's Removal From HBO Max Isn't Censorship," 11 June 2020 Hong Kong Financial Secretary Paul Chan said this month that the city is ready to defend the exchange rate and that mainland China could provide U.S. dollars through a currency swap line should Washington impose sanctions. Bloomberg Wire, Dallas News, "Dallas investor Kyle Bass starts fund that’s banking on a Hong Kong currency collapse," 9 June 2020 Australian bonds stand out particularly against New Zealand where swap markets started pricing the chance of negative rates in 2021. Ruth Carson, Bloomberg.com, "World’s Hottest Bond Market Fired by Defiance to Go Sub-Zero," 7 June 2020 Iran's foreign ministry denied Asghari's release was related to a prisoner swap. Zachary Halaschak, Washington Examiner, "'The nightmare is over': Iran releases US veteran after nearly two years of captivity," 4 June 2020 In December, Iran freed Xiyue Wang, a Princeton graduate student charged with spying, in a swap for an Iranian scientist who had been convicted in the United States on charges of violating US trade sanctions. Farnaz Fassihi, BostonGlobe.com, "Iran frees Navy veteran held for two years," 4 June 2020 Because some strips are written and submitted weeks ahead of publication, many participating artists had to go back into already approved works to add the symbols or swap in a new strip. Mark Kennedy, The Christian Science Monitor, "More than laughs: the funny papers to honor frontline workers," 2 June 2020

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.

See More

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

Keep scrolling for more

Learn More about swap

Time Traveler for swap

Time Traveler

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

See more words from the same century

Statistics for swap

Last Updated

25 Jun 2020

Cite this Entry

“Swap.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/swap. Accessed 5 Jul. 2020.

Keep scrolling for more

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
How to pronounce swap (audio)

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 How to pronounce swap (audio) \
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)

Keep scrolling for more

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

Keep scrolling for more

More from Merriam-Webster on swap

Thesaurus: All synonyms and antonyms for swap

Rhyming Dictionary: Words that rhyme with swap

Spanish Central: Translation of swap

Nglish: Translation of swap for Spanish Speakers

Britannica English: Translation of swap for Arabic Speakers

Comments on swap

What made you want to look up swap? Please tell us where you read or heard it (including the quote, if possible).

WORD OF THE DAY

See Definitions and Examples »

Get Word of the Day daily email!

Test Your Vocabulary

A More Exception(al) Quiz

  • hot dog  hot dog  hot dog  hot dog cat
  • Which of the following words is not a synonym for ‘a young person’?
Spell It

Can you spell these 10 commonly misspelled words?

TAKE THE QUIZ
Dictionary Devil

Test Your Knowledge - and learn some interesting things along the way.

TAKE THE QUIZ
Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!