Interest-rate swaps have become an integral part of the fixed-income marketplace and have proliferated over the years. They are by far the most popular derivative in the market.
This mobile application is an interactive learning experience of Interest Rate Swaps and also of general financial derivatives concepts through three easy steps: Learn, Practice, and Test. In the learning step, this app features a compilation and the definition of financial terms, financial acronyms and financial derivatives products. It also employs illustrative techniques to describe in step-by-step detail (I) what is an Interest Rate Swap, (II) how a plain vanilla swap is traded, (III) why swaps are traded in the marketplace, and (IV) the end-to-end lifecycle of a swap. In the practice step a trade capture screen allows for the input of the basic terms of an interest rate swap trade. The app also has an inbuilt utility to price the trade, displaying the net present value of each side of the trade. The full cashflow schedule for each leg of the swap is displayed along with the pertinent zero rates, forward rates, discount factor and day count. The zero rate curve used to calculate the forward rates and the future cash flows, is shown both in tabular and graphical formats. Finally, after the learning and practice steps the user's knowledge of the content is challenged with a comprehensive multiple choice practice test questions.
The application is designed for those who are keen to understand the fundamentals of Interest-rate swaps in particular and in so doing the user will garner a broad general knowledge of financial derivatives. This is a beginner's guide to understand key definitions as well as a quick reference for frequently used terms.