Exam 18: Bonds: Analysis and Strategy

Which of the following terms describes a change in investors' preferences away from risky assets towards safer bonds?

Under a laddering approach, investors mitigate the effects of an interest rate increase by:

What are the advantages and disadvantages of index funds for an individual bond investor?

Immunization is intended to protect a portfolio against interest rate risk. What should be done? How does it work?

A client tells you that he strongly believes that interest rates will fall abruptly over the next six months. He asks you to recommend bonds for a portfolio to provide capital gains on the interest rate move. Generally, what would you suggest? What if he expected rates to rise? How would your answer be impacted if the yield curve has a steep downward slope?

A weaker dollar increases the value of dollar-denominated assets to foreign investors.

An investor desiring a bond investment that changes as little as possible as interest rates change should seek a bond with long duration rather than a strip.

The credit spread cannot be negative.

If interest rates rise, reinvestment rates rise, whereas bond prices decline.

A perpetual bond has an infinite duration.

Floating rate bonds often have yields tied to the:

Which of the following European countries experienced a debt crisis post-2008?