A swap that restores an earlier position. For example, one may swap U.S. dollars for British pounds when doing so is advantageous to one's investment strategy, then reverse swap the pounds back to dollars when that becomes advantageous.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
The exchange of one bond for another such that an earlier investment position is reestablished to the investment position that existed before an earlier swap. For example, an investor might swap intermediate-term bonds for long-term bonds to take advantage of a steeply sloped yield curve. As the yield curve flattens, the investor might engage in a reverse swap by exchanging the long-term bonds for intermediate-term bonds.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.