0 the right to make a swap on or by a particular date in the future, for example the right to exchange a fixed interest rate for a lower, variable one: --
If the bond is called, the swaption is exercised, effectively canceling the swap leaving no more interest rate exposure for the issuer.
If furthermore the range accrual is callable, then the valuation model also needs to take into account the dynamic between the swaption and the underlying.
The spellcheck on my word processor refused the word "swaptions".
