Structural Trade

Get confused about this question in mock. Could anyone tell me the logics behind the below statements, please?

  1. credit bullets in conjunction with long-end treasury structures are used in a barbell strategy. (correct)

  2. callable bonds privde a spread premium that can be valuable to an investor during periods of rising interest rate volatility. (incorrect)

  3. put structures will provide investors with some protection in the event interest rates rise sharply but not if the issure has an uexpected credit event. (incorrect)

  1. I get two bullet structures to replicate a barbell strategy;

  1. If interest rates rise the spread premium i earn is going to lose value;

  2. the only thing that can be wrong here is when you buy a put on interest rates that is supposed to protect if they fall and not to rise …

Still confused about the 3rd statement. Why it is incorrect?

Sorry dude if I can’t help but I’d still remain on my last sentence above, I’ve seen you’ve posted again I’ll be monitoring the good brains!


See your other thread on this.