Interest rate and currency swaps can effectively hedge interest rate and/or currency risk, especially longer-term risks than are difficult to hedge with another derivative. Most swaps have net zero value when initiated (i.e., both sides are equal in value), but when interest rates and/or currency values change, one party will be in the money (ITM) and the other out of the money (OTM). How does one calculate the value of a swap? What are the risks of swaps?