In a swap, what do two parties exchange?

In a swap, two parties typically exchange payment streams, which are cash flows tied to different financial variables or indicators. These cash flows are often based on interest rates, currency exchange rates, or commodity prices. The primary purpose of a swap is to manage risk or take advantage of different financial conditions.

For instance, in an interest rate swap, one party might agree to pay a fixed rate while receiving a variable rate, and vice versa. The exchange allows each party to hedge against the risk associated with fluctuating interest rates or to speculate on movements in rates to achieve financial optimization.

The other options mentioned do not accurately describe the nature of swaps. Ownership of assets pertains to ownership transfers, equity shares refer to stakes in a company, and loan agreements involve the terms of borrowing rather than the exchange of payment flows characteristic of swaps. Thus, payment streams are at the core of what distinguishes swaps from other financial agreements.