Imagine you are a company treasurer who has to borrow money in six months, and you are worried that interest rates might rise between now and then. Or you run a pension fund that receives a fixed income each year and wants to swap part of it for a stream that moves with short-term rates. Interest rate derivatives give you the tools to handle exactly these kinds of problems. They allow you to lock in future rates, swap one type of interest payment for another, or buy insurance against uncomfortable rate moves. In this chapter we meet the most important of these instruments and see how they are priced and used.