Price Swap Derivative

外汇网2021-06-19 13:47:56 58

An obligation made by one company to secure the declining value of another company's assets through the commitment of shares.

Made famous by Enron, this method of backing a company's declining assets helps to inflate the value of a troubled company by hiding losses. Furthermore, due to the volatile nature of the stock market, devaluations in price of the securing company directly relates to a commitment of more shares and thus a dilution occurs.

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