1035 Exchange

Finance allah shmoop what is a swap And what is

a swap Shin Um can we just say it's an

option to swap You know like microsoft is a micro

computer software thing or like the electrocution is electricity and

execution or the bromance is you know brother and romance

which is something totally different when dealing with gerbils Anyway

one day a guy was holding a swap turned a

corner wasn't looking where he was going then glam o

he ran into an option What came of it was

a super hybrid type of security were in a slop

like i swap you so many dollars for so many

euros is tacked onto an option You want the ability

to pay off your loan either in us dollars or

in euros assuming they still exist when your loan comes

due That whole brexit thing that issue have the option

to swap the flavor of payments you're making for the

hundred grand You borrowed no it's houses play out well

When the bond was issued one dollar bought you one

euro and the interest rate was eight percent So you

paid eight grand a year to rent that hundred for

ten years at which point you're going to pay it

all off simple but after five years the exchange rates

have drifted massively Magic fairy dust was sprinkled by wizards

all over europe They beat back the thirty two hour

work week Corruption unions and economic misery wrought by not

being able to compete with china russia in africa and

now amazingly the euro is a much stronger currency than

the u s dollar that's kind of a fictional story

here that we'll make enough In fact one euro buys

you two u s dollars like it when the euro

was first put out there So if you holding the

swap shin on the interest payment flavor of the hundred

grand you borrowed if you so choose you can pay

that eight grand in euros that is instead of the

eight thousand dollars a year in interest you can pay

for thousand euros It's almost a ziff your interest rate

was cut in half That's not really it's a value

is the same it's just the number of units were

cut have theirs You know that works And if you

live in europe and work in europe and we're paid

in euros Well it really is like a roman holiday

of interest rates of just want to focus on the

numbers But the values of the same there's No free 00:02:15.938 --> [endTime] lunch here even in swap shen lang