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 Last year, Walmart allowed its store workers to use their phones to swap shifts or volunteer for extra shifts. Neil Irwin, New York Times, "Maybe We’re Not All Going to Be Gig Economy Workers After All," 15 Sep. 2019 County workers were beginning to swap out the signs on Thursday, at a cost of $17,000. USA TODAY, "Rare elephant calf, two-headed rattlesnake, another quake off Oregon: News from around our 50 states," 6 Sep. 2019 These museums should be swapping art routinely, using the enormous, varied collective to stimulate ideas, conversations, long-term loans, and shows. Brian T. Allen, National Review, "Art Bridges’ Art Populism," 14 Sep. 2019 Russia and Ukraine swapped prisoners who had been held over the conflict in east Ukraine. The Economist, "Politics this week," 12 Sep. 2019 Members have the ability to swap items once every year during their membership at no cost. Boston.com Real Estate, "Millennials and students are swiping right on luxury furniture rentals," 11 Sep. 2019 Howell and Teri Leatherwood are swapping spots for the 2019 season. Pat Stoetzer, baltimoresun.com/maryland/carroll, "Fall Sports Previews: 3 things to know for volleyball in 2019," 6 Sep. 2019 Also this year, Virgin Atlantic announced a more relaxed dress code for female flight attendants, who are no longer required to wear makeup and are now able to swap skirts for pants without seeking special permission. Michelle Cheng, Quartz at Work, "Half of US companies still don’t allow casual dress at work," 29 Aug. 2019 Social media groups are swapping information and posting queries. Lee Roop | Lroop@al.com, al, "’Work with us, have patience’ says Huntsville’s new recycling program," 2 Aug. 2019 Recent Examples on the Web: Noun The lawsuit, filed by Trustees for Alaska in U.S. District Court in Anchorage, asserts that a July land swap between the Interior Department and an Alaska Native corporation violates environmental laws. Alex Demarban, Anchorage Daily News, "Groups sue Trump administration over latest deal to punch road through Alaska refuge," 7 Aug. 2019 The rest of Asia will watch the G-10 basis swaps closely. Washington Post, "Danger Signs From an Esoteric Corner of Finance," 18 Sep. 2019 Transferring the prisoners out of Connecticut, as the state did with the two men convicted of murdering a mother and her two daughters during a 2007 Cheshire home invasion, is also challenging, as the receiving state has to agree to the swap. Kelan Lyons, courant.com, "Prisoner population tumbles at maximum-security Northern Correctional Institution," 9 Sep. 2019 The funding swaps grow out of the budget stalemate between Trump and congressional Democrats, who have opposed his longstanding requests for new money to construct a border wall. Yvonne Wingett Sanchez, azcentral, "Fort Huachuca project delayed for Trump's border efforts," 4 Sep. 2019 The company is offering upgrades to the newer model for customers who bought the old version from July 17th going forward (when Nintendo announced the new model), according to a report from Polygon, which confirmed Nintendo is performing the swaps. Chaim Gartenberg, The Verge, "If you’ve bought a Nintendo Switch since July 17th, you might be able to upgrade for free," 16 Aug. 2019 Under the swap, an investor with 1,000 shares of Viacom would receive 596.25 shares of CBS. Edmund Lee, New York Times, "CBS and Viacom to Reunite in Victory for Shari Redstone," 13 Aug. 2019 But what truly excites Eshel is how dramatically the swap could clean the nation’s waterways. Shannon Hall, Scientific American, "These Plants Can Replace Meat—but Will Doing So Help the Environment?," 8 Aug. 2019 The three teams agreed to the seven-player swap Tuesday night, but medical reports didn't get approval by Major League Baseball until Wednesday — just hours before the trade deadline. Tom Withers, baltimoresun.com, "Indians trade fiery Trevor Bauer to Reds, land Yasiel Puig in three-team deal," 31 July 2019

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

31 Oct 2019

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
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)

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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

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

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