Community Forex Questions
What is a stock swap?
In a stock swap, one party pays the other the so-called interest income. The interest income is calculated on predetermined dates and throughout the entire period of the concluded agreement based on a certain stock index. In the second case, payments are made at a fixed/floating rate or based on another stock index. Typically, the amount of the payment is a percentage of the notional principal amount.
A stock swap is a corporate transaction in which shareholders exchange their shares in one company for shares in another company. This exchange typically occurs during mergers, acquisitions, or other restructuring events. In a stock swap, shareholders of the acquired company receive shares of the acquiring company's stock in exchange for their existing shares. The exchange ratio is determined based on the relative values of the two companies involved in the transaction. Stock swaps are often used as a method of payment in merger and acquisition deals because they allow companies to avoid using cash, thereby conserving liquidity. Additionally, stock swaps can offer tax advantages to shareholders, depending on the jurisdiction and the structure of the transaction.

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