Asset swap

An asset swap is basically when you trade one thing for another thing. It's kind of like when you trade your toy car for your friend's toy truck because you really wanted to play with a truck instead of a car.

But in finance, an asset swap is when someone has one kind of investment, like a bond, and they swap it for another kind of investment, like another bond or some kind of stock. They do this for a few reasons.

One reason is because they might want to change the kind of investment they have. If they have a bond that pays a fixed amount of money every year, but they think they could make more money with a stock that might go up in value, they might do an asset swap.

Another reason is because they might want to change the risk of their investment. If they have a bond that they think is becoming more risky because they think the company it's from might not be able to pay the money back, they might swap it for a bond from a different company that they think is safer.

So an asset swap is just when you trade one investment for another, kind of like how you trade toys with your friends.