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Interest rate swap 1 | Finance & Capital Markets | Khan Academy

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The basic dynamic of an interest rate swap. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/derivative-securities/interest-rate-swaps-tut/v/interest-rate-swap-2?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/derivative-securities/credit-default-swaps-tut/v/financial-weapons-of-mass-destruction?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: Interest is the basis of modern capital markets. Depending on whether you are lending or borrowing, it can be viewed as a return on an asset (lending) or the cost of capital (borrowing). This tutorial gives an introduction to this fundamental concept, including what it means to compound. It also gives a rule of thumb that might make it easy to do some rough interest calculations in your head. About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy
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Text Comments (24)
uawsux (2 months ago)
This is why Trump appointed Powell Jesuit to the Fed Trump rhetoric is lower interest rates lower interest rates no no no it is a lie it is a misdirection he wants the FED raise rates raise rates raise rates to destroy interest rate swaps destroy derivatives liquidate them question is will he fail
Deep Sarkar (5 months ago)
What if the floating rate increases the next year? Will they still follow the same arrangement?
Leo Liu (10 months ago)
thanks for the amazing explanation
Kendall Tennyson (11 months ago)
you never explained where the 7% or Libor + 1% came from, where is the quality spread differential?
Rahul Surana (1 year ago)
thanks a lot Salman Khan 😊
TheyTake MyCalls (1 year ago)
Okay seriously this guy is way better at explaining things then my teacher. It's me 3 minutes to get it here, and takes my teacher 2 hours.
Rayhan Kabir (1 year ago)
very helpful :)
Nadia Al-Rzouq (1 year ago)
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cashflownpv (3 years ago)
Thanks if only my MBA program was as straightforward as your lessons I would be a much happier camper.  Great job KA and thanks very much once again!!!!
Madison Reid (3 years ago)
you lost me at libor...
Anthony Cerrud (1 year ago)
London Interbank Offering Rate is an average of the 16 banks in EU and averages them into the LIBOR.
JesNicoleW (4 years ago)
Thanks for your help!
pebre79 (5 years ago)
I love ya Sal! you're a fantastic teacher
houdapurple (5 years ago)
thank you !
Jordan Agan (5 years ago)
i love your handwriting sal
Mahatma Gandhi (5 years ago)
Thank you so much for the video. Much appreciated.
concy ryan (5 years ago)
Thanking you from Ireland
Tyler Nguyen (6 years ago)
Most likely, Company A has weak or poor credit ratings, hence, banks will issue floating interest rate for Company A.
Maribel Delos Reyes (6 years ago)
it's hard to sol.??
AznWill789 (6 years ago)
here what i don't get, why would company A take out a variable rate if it doesnt like a variable rate just to swap it with another company?
Shyama Varma (6 years ago)
No one does it like sal!
Steven Nguyen (7 years ago)
sometimes I watch your videos to listen to your voice......
Krokorok (7 years ago)
My teacher told me about your channel. Plus when she said "Khan" I was like: :O My middle name is also Khan so yeah...
Jiyva (7 years ago)
i love you

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