Fixed Rate
A fixed rate is an interest rate in a derivative contract that remains unchanged for the life of the contract and is used to determine the fixed leg cash flows. In contexts like an interest rate swap, one party pays this fixed rate on the notional amount while the other pays a floating rate linked to a reference rate.
Example: For instance, in a swap with a $50 million notional, one party pays a fixed rate of 3.25% on the notional each year while the other pays a floating rate tied to SOFR.
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