Swaps
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Swaps involve the exchange of one security for another to change the maturity, quality of issues, or because investment objectives have changed. Swaps have grown to include currency swaps and interest rate swaps.
According to a survey by the International Swaps and Derivatives Association, Inc., the notional (underlying) outstanding value of credit derivatives - which for the purposes of the survey involved credit default swaps referencing single names, indexes, baskets and portfolios - grew by 32% in the first six months of 2007 to $45.46 trillion from $34.42 trillion. The annual growth rate for credit derivatives was up 75% from $26 trillion at mid-year 2006.
