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Synthetic instrument
A strategy based on a combination of positions in various financial instruments that is intended to replicate the features of a position in a single instrument, especially as regards risk and return.
For example, the combination of a floating-rate long-term debt and an interest rate swap providing for floating interest receipts and fixed interest payments would be comparable to a fixed-rate long-term debt.
Translations
Synonyms and variations
- Synthetic
- Synthetic position