Skip to content

A total return equity swap is…

November 13, 2017

…a contract for a series of exchanges of the total return on specified asset in return for specific fixed or floating payments.

Similar to the short sale against the box, investor is fully hedged and earns money market rate return. Because a derivative dealer is involved the return is less than short sale against the box due to larger dealer spread charged.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: