Pure Yield Pickup Swap

Filed Under: , ,
Dictionary Says

Definition of 'Pure Yield Pickup Swap'


A transaction in which bonds with lower returns are swapped for bonds with higher returns. With a pure yield pickup swap the sole purpose of the transaction is to increase yield, the new bonds will have a similar maturity and risk rating as the old bonds; only the coupon will differ.

Investopedia Says

Investopedia explains 'Pure Yield Pickup Swap'


Bonds earn yields for investors in three primary ways: coupon interest, capital gains and coupon reinvestment. Investors can use different types of bond swaps to take advantage of these different types of yields to try to improve their returns. Other examples of bond swaps include a rate anticipation swap, which is carried out with the goal of earning a better return from an expected change in market interest rates; a substitution swap, which exchanges two bonds that are similar in every way except price; and intermarket spread swaps, which seek to profit from yield mismatches between bonds in different sectors, such as government bonds and corporate bonds.

comments powered by Disqus
Hot Definitions
  1. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  2. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
  3. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
  4. IPO ETF

    An exchange-traded fund that focuses on stocks that have recently held an initial public offering (IPO). The underlying indexes tracked by IPO ETFs vary from one fund manager to another, but index IPO ETFs are usually passively managed and contain equities that have recently been offered to the public.
  5. IPO ETF

    An exchange-traded fund that focuses on stocks that have recently held an initial public offering (IPO). The underlying indexes tracked by IPO ETFs vary from one fund manager to another, but index IPO ETFs are usually passively managed and contain equities that have recently been offered to the public.
  6. Maritime Law

    A body of laws, conventions and treaties that governs international private business or other matters involving ships, shipping or crimes occurring on open water.
Trading Center