Exam 18: Bonds: Analysis and Strategy

A bond strategy that attempts to immunize the portfolio from interest rate risk is based on the concept of:

A bond investor has $100,000 and has determined 5 years is his maximum term. He puts $20,000 in one-year bonds, $20,000 in two-year bonds, etc. up to $20,000 in five-year bonds. This is an example of:

During periods of economic expansion, the spread between corporate bonds and U.S. Treasuries generally:

Interest rate risk is composed of:

Immunization is a strategy in which bond investors:

A portfolio is said to be immunized if:

The units of measure for modified duration is years.

For a bond, Macaulay duration represents the time period where:

Bond investors expecting interest rates to rise should shift their portfolios toward:

Under the ladder approach, bond investors purchase bonds with different maturities in order to gain some protection from default risk.

Which of the following would not be expected to cause yield spreads to widen?

Which of the following is an active bond strategy?

For a zero-coupon bond, duration is the same as time to maturity.

Relative to actively-managed bond funds, a major advantage of bond index funds is their:

The yield on a small, regional corporate bond is generally higher than the yield on a large, national corporate bond mainly due to:

Which of the following statements about the bond market is not true?

Effective duration should be used to reflect the default risk of a callable bond.

Which form of duration should be used when evaluating a floating-rate bond?

A bond investor wishing to take advantage of a forecasted decrease in interest rates would shift toward bonds with lower coupon payments and longer maturities.

The introduction of the Euro: