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LOS f: Describe a credit spread and discuss the suggested relation between credit spreads and the well-being of the economy.
Q1. Which of the following is the reason why credit spreads between high quality bonds and low quality bonds widen during poor economic conditions?
A) default risk.
B) indenture provisions.
C) interest risk.
Q2. If a U.S. investor is forecasting that the yield spread between U.S. Treasury bonds and U.S. corporate bonds is going to widen, then which of the following is most likely to be TRUE?
A) The economy is going to expand.
B) The U.S. dollar will weaken.
C) The economy is going to contract.
Q3. If investors expect greater uncertainty in the bond markets, you should see yield spreads between AAA and B rates bonds:
A) slope downward.
B) widen.
C) narrow.
Q4. Which of the following is the most appropriate strategy for a fixed income portfolio manager under the anticipation of an economic expansion?
A) Sell corporate bonds and purchase treasury bonds.
B) Enter a pay-fixed, receive-floating rate swap.
C) Purchase corporate bonds and sell treasury bonds.
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发表于 2009-3-2 17:15
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