An odd or partial period within the life of a swap that doesn’t constitute, by itself, a whole settlement period. In other words, for a 10-year swap with semiannual payments, there are 20 equal periods. However, in real life, the rate fixing may be three months after the swap agreement was concluded. In this case there is a stub period, being either the first three months or the last three months over the swap tenor (the former is known as front-stub period, while the latter is called back-stub period). Likewise, an investor may decide to unwind a swap that has a remaining life of five years, two months, and ten days. In either case, an odd period is left over normal even periods.
Derivatives
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