Rate Anticipation Swap
A type of swap in which bonds are swapped according to their current duration and predicted interest rate movements.
Investopedia Commentary
Investors will usually participate in these swaps to maximize profits from favorable interest rate movements and minimize losses from unfavorable movements.
For example, bonds with higher duration generally exhibit higher price fluctuations when an interest rate changes. If interest rates are expected to decline, investors would swap for bonds with a higher duration in order to maximize potential gains from the price movement.
See also: Bond Swap, Duration, Interest Rate, Swap
rate anticipation swap