reverse swap

reverse swap definition - business

reverse swap

The exchange of one bond for another such that an earlier investment position is reestablished to the position that existed before an earlier swap. For example, an investor might swap intermediate-term bonds for long-term bonds to take advantage of a steeply sloped yield curve. As the yield curve flattens, the investor might engage in a reverse swap by exchanging the long-term bonds for intermediate-term bonds.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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