Constant Maturity Swap - CMS
A variation of the regular interest rate swap. In a constant maturity swap, the floating interest portion is reset periodically according to a fixed maturity market rate of a product with a duration extending beyond that of the swap's reset period.
Investopedia Commentary
Constant maturity swaps are exposed to changes in long-term interest rate movements. They are initially priced to reflect fixed-rate products with maturities between two and five years in duration, but adjust with each reset period.
Related Links
Corporate Use of Derivatives for Hedging
Introduction To Hedge Funds - Part One
Using Currency Correlations To Your Advantage
See also: Airbag Swap, Asset Swap, Commodity Swap, Derivative, Fixed Interest Rate, Interest Rate Swap, Swap, Swap Curve, Swap Rate