I just saw these terms on a sample CFAI exam, but these terms aren’t mentioned in Schweser. Can anyone tell me the difference and and why trader pricing is used to calculate most of the indexes? Thanks.
From JoeyD in a previous post… This question is a bit silly, but they are trying to get across the idea that since there is not a bond exchange like there is a stock exchange they need to get pricing from traders, not settlement prices from exchanges. Most bond indexed use market value weights (like how many bonds are outstanding times their price) for weights even though there are a billion criticisms of this. I think most bond indexes get their prices from independent data providers who get their prices from, well, they aren’t saying.
Thanks malnoll. It makes more sense now