Question #74

Reading: Reading 27 Valuation and Analysis of Bonds With Embedded Options

PDF File: Reading 27 Valuation and Analysis of Bonds With Embedded Options.pdf

Page: 25

Status: Unattempted

Part of Context Group: Q74-76 First in Group
Shared Context
- Are the two observations Berg writes down after the fixed income conference advantages to using the swap rate curve as a benchmark instead of a government bond curve? A) Only Statement 1 is an advantage. B) Both statements are advantages. C) Only Statement 2 is an advantage.
Question
If the spot-rate curve experiences a parallel downward shift of 50 basis points:
Answer Choices:
A. Portfolio 1 will experience the best price performance
B. all three portfolios will experience the same price performance
C. Portfolio 3 will experience the best price performance
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