(Bloomberg) -- Volatility on options for interest-
rate swaps may decline as concern eases that losses in subprime
mortgage loans and other risky debt will spread, according to
RBS Greenwich Capital.
Investors holding mortgage securities often use so-called
swaptions to hedge the adverse moves in interest rates. A swap
in an agreement to exchange fixed for variable-rate payments
over a period of time. Falling rates can trigger increased
mortgage refinancing, cutting returns for bondholders.
Read more at Bloomberg Currencies News
rate swaps may decline as concern eases that losses in subprime
mortgage loans and other risky debt will spread, according to
RBS Greenwich Capital.
Investors holding mortgage securities often use so-called
swaptions to hedge the adverse moves in interest rates. A swap
in an agreement to exchange fixed for variable-rate payments
over a period of time. Falling rates can trigger increased
mortgage refinancing, cutting returns for bondholders.
Read more at Bloomberg Currencies News
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