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Non-Tech : Derivatives: Darth Vader's Revenge
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To: axial who wrote (1297)3/19/2009 7:58:00 AM
From: Sam  Read Replies (1) of 2794
 

South County got into the swap when it agreed to pay an annual fixed rate of 3.52 percent to Merrill Lynch for 30 years after it sold $52 million in auction-rate securities, or debt with interest that resets at periodic bidding every 7, 28 or 35 days.

Can you explain to me what these people did, exactly? I'm don't really understand what they are on the hook for. Did they do the equivalent of an ARM?
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