Swaps are financial agreements between two parties to exchange cash flows or other financial instruments over a specified period. Typically, these involve exchanging fixed interest rate payments for floating rate payments, allowing parties to manage their interest rate exposure. Swaps can be used for hedging risks or speculating on changes in market conditions. There are various types of swaps, including interest rate swaps, currency swaps, and commodity swaps. Each type serves different purposes and can be tailored to meet the specific needs of the parties involved. Understanding swaps is essential for effective risk management in financial markets.