A basis swap can be used to limit interest rate risk that a firm faces as a result of having different lending and borrowing rates.
There is an active market for basis swaps. FinPricing provides useful tools to build various curves, such as interest rate base curve, basis curve, OIS curve, bond curve, treasury curve, etc.
But in fact, they are different due to different market conventions.
These types of swaps allow the exchange of variable interest rate payments that are based on two different interest rates. Your input will help us help the world invest, better! Go to the list of the tools To use the formula, you need to compute simply compounded forward rate instead of other compounding types.
As a result, loans to the business are considered part of your basis, even though you did not directly contribute this capital.