A bond swap made in response to forecasts of interest rate changes is called ______.

Question

Quizplus · Accepted Answer

A bond swap made in response to forecasts of interest rate changes is called a rate anticipation swap. Choice A, substitution swap, is not a commonly used term in the context of bond swaps. Choice B, intermarket spread swap, refers to a different type of bond swap that involves taking advantage of pricing discrepancies between two markets. Choice D, pure yield pickup swap, involves swapping into a bond with a higher yield without regard to interest rate forecasts.

A Bond Swap Made in Response to Forecasts of Interest