Bond Market Indexes Can Be Difficult to Construct Because

question 31

Multiple Choice

Bond market indexes can be difficult to construct because

• A)they cannot be based on firms' market values.
• B)bonds tend to trade infrequently, making price information difficult to obtain.
• C)there are so many different kinds of bonds.
• D)prices cannot be obtained for companies that operate in emerging markets.

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Definitions:

Option Clearing Corporation

The organization responsible for ensuring the proper settlement of options contracts and mitigating counterparty risk in the options market.

Post Margin

The amount of collateral a participant must deposit with a clearinghouse to cover potential future losses on positions.

Purchased

The act of acquiring ownership of an asset in exchange for payment.

Digital Option

A type of option that pays either a fixed amount of cash or nothing at all, depending on whether a certain condition is met at expiration.