Portfolio management technique
in which bonds are bought
and sold simultaneously (to profit
in their market value) by swapping one type
with another. Three main types of swap
are (1) Maturity swap: exchanging long-term bonds with short-term ones, and vice versa. (2) Quality swap: exchanging highly-rated bonds with low-rated ones, and vice versa. (3) Yield swap: exchanging deep-discount bonds with high-interest bonds, and vice versa. See also swap.