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

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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

Start with the spiralizer, and make a colorful no-cook pad Thai by swapping out the pasta for a bowl of colorful vegetable noodles. Terri Milligan, Milwaukee Journal Sentinel, "Keep your cool: No-heat cooking keeps you comfortable and the food fresh," 5 July 2018 Photographer: Wil Riera/Bloomberg Falcon is campaigning on a plan to remedy Venezuela's economic meltdown by swapping its near-worthless bolivar with the U.S. dollar as Ecuador and El Salvador have done. Philip Brian Tabuas, Bloomberg.com, "Venezuela Votes in a Presidential Election. Enthusiasm Is Absent," 19 May 2018 Rollingreens has upgraded the classic snack by swapping potatoes for millet, an ancient grain full of fiber and a host of other nutrients. Grace Dickinson, Philly.com, "Beyond bugs: 12 unique (and strange) ingredients at Mom's Organic Market and what to do with them," 16 May 2018 Outside, the home's brick exterior is greatly improved courtesy of a new door painted Benjamin Moore Seaweed green and by swapping white dentil molding for black. Lisa Boone, latimes.com, "After years spent traveling the world, this filmmaking family puts down roots in Pasadena," 27 Mar. 2018 Each codon is made up of three nucleotides (ATG, for example, or TCC), and by swapping out certain nucleotides in the codons, Hysolli and her team hope to make genome-wide changes that would make a cell resistant to viruses. David Ewing Duncan, WIRED, "The Next Best Version of Me: How to Live Forever," 27 Mar. 2018 The super-group, comprised of Axwell, Sebastian Ingrosso and Steve Angello, have done a social media overhaul by swapping out all of their profile pictures and banners with a fresh image of their logo. David Rishty, Billboard, "Swedish House Mafia Fuels Reunion Rumors With New Cover Image," 2 Mar. 2018 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

Recent Examples on the Web: Noun

This was the world of collateralized debt options (CDOs) and credit default swaps (CDS). Emily Stewart, Vox, "How close are we to another financial crisis? 8 experts weigh in.," 18 Sep. 2018 Skripal, a former Russian double agent, was jailed in Russia in 2006 for selling state secrets to British intelligence for 10 years, but he was released in 2010 as part of a high-profile spy swap. Matthew Bodner And Karla Adam, BostonGlobe.com, "US, France, Germany join Britain in blaming Russia for attack," 15 Mar. 2018 Whether the swap was intentional remains a mystery. Allysia Finley, WSJ, "The Making of a DNA Detective," 15 Feb. 2019 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

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

28 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 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)

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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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