Qualitative Spread Differential (QSD) is the difference between the market interest rates achieved by the two parties entering into an interest rate swap.
This is a measurement that companies can use to assess counterparty risk in an interest rate swap.
QSD is calculated by subtracting the contractual market rate from the rate available to the counterparty for instruments with a similar rate.
When the QSD is positive, the swap is considered to be beneficial to both parties.
An asset swap is used to convert cash flow characteristics in order to hedge risks from one financial instrument with undesirable cash flow characteristics to another with favorable cash flow characteristics.
Equity derivatives are financial instruments whose value is determined by the change in the price of the underlying asset, if that asset is a stock or stock index.
The forward price is the price at which the seller delivers the underlying asset, derivative or currency to the buyer of a forward contract on a predetermined date.
The International Swaps and Derivatives Association is a professional association that has been working since 1985 to promote and improve the trading of swaps and derivatives.
Swap rate refers to the fixed rate that a party to a swap contract asks for in exchange for a commitment to pay a short-term rate, such as the labor or federal fund rate.
A warrant premium is the additional value of a warrant in excess of the established minimum, which can be valued as the difference between its exercise price and the market price of the underlying asset.
An inflationary zero-coupon swap (ZCIS) is a type of inflationary derivative in which an income stream linked to inflation is exchanged for an income stream with a fixed interest rate.
The Bank Note Swap Rate (BBSW) is a short-term interest rate used as a benchmark for valuing Australian dollar derivatives and securities, primarily floating rate bonds.