Quiz Ch 11 – Active Management in Bond Immunization
Essentials of Investments
Bodie, Kane, and Marcus
12th Edition
Why does immunization of coupon-paying bonds NOT indicate portfolio manager inactivity?
Why does immunization of coupon-paying bonds NOT indicate portfolio manager inactivity?
What benefits do cash flow matching and dedicated strategies offer?
When does a bank face market value of equity risk due to a duration mismatch between assets and liabilities?
What specific aspect of a bond does duration analysis primarily focus on?
How does a bond’s duration change with variations in coupon rates, assuming all other factors remain constant?
Under what circumstances will the realized rate of return surpass the promised yield for a bond with a 4-year duration held over a 6-year investment horizon?
How does a bond’s duration change with variations in yield to maturity, assuming all other factors remain constant?
What strategy involves swapping a bond for another with similar attributes but at a better price?
How is the realized rate of return affected by changes in interest rates when holding a bond with a 10-year duration for an investment horizon of 6 years?
What swap type occurs when a portfolio manager sells short-duration bonds to buy long-duration bonds based on rate expectations?