rate anticipation swap

Rate Anticipation Swap

The exchange of bonds in one's portfolio for different bonds that will better mature at the portfolio's desired duration, given the investor's expectation about the future direction of interest rates. For example, an investor may buy bonds that will mature at a time when the investor believes that interest rates will rise, theoretically allowing him/her to receive a higher yield.

rate anticipation swap

The sale of one bond combined with the purchase of another bond of different maturity in order to take maximum advantage of expected changes in interest rates. For example, an investor would want to trade short-term bonds for long-term bonds if interest rates were expected to fall, because the price of the long-term bonds would rise more than the price of the short-term bonds.