Fixed Income Quiz

CFA Level III
#1

Question: Which of the following statements is (are) true with respect to the rationales behind secondary trading in corporate bond markets? (I) Swapping existing corporate bonds for those that were recently issued, should improve the liquidity of the bond portfolio. (II) Credit upside trades involve the purchase of bonds that were recently upgraded in order to capture the price appreciation that comes with such an upgrade. (III) If corporate bond spreads are expected to tighten, holding everything else constant, a curve adjustment trade might involve the trading of low duration bonds in return for high duration bonds. (IV) Sector rotation trades depend very largely on the manager’s expectations with respect to the economic cycle. A) I, III, and IV only. B) I and III only. C) II and IV only. D) I, II, and IV only.

#2

D DOOODES

#3

A shuns

#4

A

#5

A. [sell] trading of low duration bonds in III?

#6

I meant A, credit upside is the reverse of what you think.

#7

A, but i almost said C. Sector Rotation may be more dependent on company analysis no?

#8

This is a reading comprehension Q.:wink:

#9

A for the win!!

#10

http://www.youtube.com/watch?v=AsUW8JcnzZs Edit: how i feel when i get a question right

#11

And the correct answer is… … … . A

#12

A

#13

A

#14

SkipE99 Wrote: ------------------------------------------------------- > http://www.youtube.com/watch?v=AsUW8JcnzZs > > Edit: how i feel when i get a question right Pet detective…my favorite.

#15

A little suggestion here please. If anyone posts a question kindly wait for about 24 hours before posting the answer. This way those of us that live in between Western US and Eastern China may also participate. Furthermore it generates conversations deepens our insights. Though I get scared occasionally when some people argue wrongly…

#16

me.tega Wrote: ------------------------------------------------------- > A little suggestion here please. > > If anyone posts a question kindly wait for about > 24 hours before posting the answer. This way those > of us that live in between Western US and Eastern > China may also participate. Furthermore it > generates conversations deepens our insights. > > Though I get scared occasionally when some people > argue wrongly… No, pls! Just wait for 1 hour at most before the post got lost in the forum and in my mind…

#17

(II) Credit upside trades involve the purchase of bonds that were recently upgraded in order to capture the price appreciation that comes with such an upgrade is incorrect why?

#18

credit upside is bought ahead of the upgrade, not after

#19

aaaah thats what i was thinking …grassyass senor

#20

B for sure