Definitions for "Total Return Swap"
A swap transaction in which one party agrees to pay the full return (including the income and profit from change in the capital value of the asset) on a particular reference asset, such as a specific bond or an equity, issued by a private borrower, with a life longer than the swap, and agrees to receive in return a predetermined amount. It allows to transfer the total economic risk of holding the assets without necessarily buying or selling the underlying assets.
a derivative instrument that allows an investor to receive the total economic return of an asset (income plus or minus any change in capital value) without actually buying the asset
a means to transfer the total economic exposure, including both market and credit risk, of the underlying asset