If swaps are meant to reduce risk, why do they so often lead to financial distress? The "trap" usually comes down to three factors: 1. The Exit Cost (Breakage Fees)
Banks are experts in forecasting; most small-to-medium business owners are not. The "trap" is often set at the beginning through embedded margins and complex terms that make the swap appear cheaper than it actually is over the long term. How to Avoid the Trap swaps-and-traps
The two floating rates cancel each other out, leaving the borrower with a predictable fixed-rate cost. The Traps Beneath the Surface If swaps are meant to reduce risk, why