Interest rate swaps allow portfolio managers to adjust interest rate exposure, and offset the risks posed by
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Interest rate swaps allow portfolio managers to adjust interest rate exposure, and offset the risks posed by interest rate volatility. By increasing or decreasing interest rate exposure in various parts of the yield curve using swaps, managers can either ramp-up or neutralize their exposure to changes in the shape of the curve. Swaps can also act as substitutes for other, less liquid fixed income instruments.
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