Who is long in Swap?

I used to think that I got swap down, Now I find myself confuse. What the heck? Anyway. If you are in a greement to pay fixed fixed receive floating, you are long. Is that correct? Because the duration is positive. Right? Therefore if you receive fixed and Pay floating, you are short? Am I correct? Therefore, a negative value of the swap means that you have credit risk since you are short. My confusion comes to the fact that when set the equation. Long means that I am paying fixed= Floating rate -Long rate Short means that I am received fixed= Fixed rate -floating rate. From my understanding, it does not matter whether that I am long or short. What’ s matter is the payoff. If is negative, I owe them and if is positive, they own me. Why I am so confuse. NOT good Please help.

Are you freaking ppl sleeping? this is not a time to sleep. the bad is out there:-)

the bad surrounded me as i tried to sleep http://www.analystforum.com/phorums/read.php?13,996914

Once again…NURSE!!

Mandelbrot Wrote: ------------------------------------------------------- > Once again…NURSE!! My UK friend don’t do that. I am serious, I am confuse and I don’t to hit the book again.

Which side is long or short in a swap is just an arbitrary convention, but a convention worth knowing. Since I couldn’t remember myself, I looked it up and found: “I think people often avoid using the terms “long” or “short” with respect to swaps because these have caused some confusion in the past. However, it is true that paying fixed is considered to be long the swap. An easy way to remember this is to remember that the convention with swaps is the opposite of the convention with bonds. If you receive fixed on a bond, you are long the bond. If you receive fixed on a swap, you are short the swap. In this sense, a long swap hedges a long bond.” From: http://contingencyanalysis.com/archive/archive99-2/00000161.htm A LONG SWAP HEDGES A LONG BOND. Probably a useful way to remember it.

Sorry Tib. I think bchadwick has the answer…

I think CFAI at L3 doesn’t try to trick you with terminology. In most of the questions I remember, it was fairly easy to understand what you were receiving or paying, and it didn’t depend on knowing this. I still think it’s worth knowing - at least as you go into the exam - but I wouldn’t freak out about it.

bchadwick Wrote: ------------------------------------------------------- > Which side is long or short in a swap is just an > arbitrary convention, but a convention worth > knowing. Since I couldn’t remember myself, I > looked it up and found: > > “I think people often avoid using the terms “long” > or “short” with respect to swaps because these > have caused some confusion in the past. However, > it is true that paying fixed is considered to be > long the swap. An easy way to remember this is to > remember that the convention with swaps is the > opposite of the convention with bonds. If you > receive fixed on a bond, you are long the bond. If > you receive fixed on a swap, you are short the > swap. In this sense, a long swap hedges a long > bond.” > > From: > http://contingencyanalysis.com/archive/archive99-2 > /00000161.htm > > > A LONG SWAP HEDGES A LONG BOND. Probably a useful > way to remember it. Thank you so much.

bchadwick Wrote: ------------------------------------------------------- > I think CFAI at L3 doesn’t try to trick you with > terminology. In most of the questions I remember, > it was fairly easy to understand what you were > receiving or paying, and it didn’t depend on > knowing this. > > I still think it’s worth knowing - at least as you > go into the exam - but I wouldn’t freak out about > it. Actually, I was confused by on of the sample exam questions, Althought I got it but I want to be in the save side. Maybe it is because that I am insane lately.

Mandelbrot Wrote: ------------------------------------------------------- > Sorry Tib. I think bchadwick has the answer… For you, In UK, you already got you lunch. maybe you junk. How was my queen doing overthere? I still cannot understand why I cannot touch her? If ppl cannot touch her, how come she got babies? is she Mary, therefore, by GOD miracle. Or She is the one who decided when to have s*x with husband. WTF going on overthere. My president can touch his wife anytime. I even give her a hug. America, America, Ohh beautiful…:slight_smile: just joking bro.

Anybody can fuck the Queen if they apply in writing to Buckingham Palace. Mark your envelope “Application to Shag the Queen”, and in your letter make sure you state if you would like to do her up the arse or in the minge. Try it…

Mandelbrot Wrote: ------------------------------------------------------- > Anybody can fuck the Queen if they apply in > writing to Buckingham Palace. Mark your envelope > “Application to Shag the Queen”, and in your > letter make sure you state if you would like to do > her up the arse or in the minge. Try it… Are you serious, my letter is on its way. I want to make sure that you are not offended by my comments.

Dude, most British people don’t give two fucks about the royal family. This is like me thinking that all US guys are called Billy-Bob, screw their sisters and own ten shotguns.

^they don’t???

Mandelbrot Wrote: ------------------------------------------------------- > Dude, most British people don’t give two fucks > about the royal family. This is like me thinking > that all US guys are called Billy-Bob, screw their > sisters and own ten shotguns. As soon as I get off my sister I’m grabbing my favorite sawed-off and coming for you.