Why Do Garbage Class Bonds Often Have a Negative Duration

question 81

Multiple Choice

Why do garbage class bonds often have a negative duration?

• A)The value of the returns in this bond class increases when interest rates increase.
• B)It gives the rights to collateralization.
• C)Bond values fall with interest rate increases.
• D)It gives rights to reinvestment income on the cash flows in the CMO trust.
• E)Significant risk premium required by the uninsured depositors.

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Definitions:

Species

The smallest working units in biological classificatory systems; reproductively isolated populations or groups of populations capable of interbreeding to produce fertile offspring.

Group Biological Changes

The evolutionary adaptations and alterations in biological characteristics occurring in populations over time.

Geological Time Period

A system of chronological dating that relates geological strata to time, used by geologists to describe the timing and relationships between events that have occurred during Earth's history.

Hominoids

A term that refers to the group of primates that includes all great apes and humans, characterized by a larger brain and more complex behaviors compared to other primates.