What makes interest rate derivatives attractive right now?
Over the past year and a half, we have seen dramatic evidence of the damage that excessive or unmanaged risk can do to both businesses and to the economy. Yet taking on risk is unavoidable if you want to grow your business and improve your bottom line. The answer to this dilemma is to address and actively manage the risks you can control to maximize the value of your business. Interest rate derivatives can help you mitigate the risk of unpredictable interest rate swings. By adding certainty around this expense category on your income statement at a time when improving margins is critical, you can ensure that more of each revenue dollar drops to the bottom line. Interest rate derivatives are often considered difficult to understand. How do they work? Interest rate derivatives, such as swaps, are contractual agreements between the bank and a client. The parties agree to exchange different forms of interest payments through a stated maturity date. In one of the most popular versions, inte
