bond swap
simultaneous sale and purchase of bonds an exchange of some bonds for others, usually to gain a tax advantage or to diversify a portfolio
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simultaneous sale and purchase of bonds an exchange of some bonds for others, usually to gain a tax advantage or to diversify a portfolio
real rate swaps, such as asset swaps of inflation-indexed bonds. Inflation swaps are simply a linear form of such derivatives. Real rate swaps consist of the nominal interest swap rate minus the corresponding inflation swap.
but is exposed if rates rise, in a similar fashion to holding a long bond position. The credit risk remains whether the swap is in-the-money or not. If one party to the swap is in-the-money, then the risk is their exposure to the other party defaulting.
Futures, Options, and Swaps is a widely used textbook that provides a practical introduction to derivatives and their use in the capital markets. It analyzes basic theory to aid understanding of the role that financial engineering plays in pricing and hedging these instruments, and also examines
or not they were insurance. As they initially were used by owners of bonds to seek protection or insurance in the case of a default by the issuer of the bonds, this was a reasonable question. In 2000, under a prior administration, the New York Insurance Department was asked to determine if swaps were insurance
By Eric R. Dinallo
Definitions of ’bond swap’ and meaning of ’bond swap’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’bond swap’ and other financial terms with our online QFINANCE Financial Dictionary.