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  • August 1, 2020
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Commodity Index Swap

A commodity swap which has a commodity index as underlying. In this swap, cash flows are intended to replicate the commodity index. The return of the swap is based on the value of the underlying index. In essence, this swap involves the exchange of a fixed price in return for the value of the specified commodity index on a predetermined date.

The swap seller may hedge its own exposure to the swap contract by buying corresponding futures contracts in the same commodity index.


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