A Substitution Swap Is an Exchange of Bonds Undertaken to

question 43

Multiple Choice

A substitution swap is an exchange of bonds undertaken to

• A) change the credit risk of a portfolio.
• B) extend the duration of a portfolio.
• C) reduce the duration of a portfolio.
• D) profit from apparent mispricing between two bonds.
• E) adjust for differences in the yield spread.

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Definitions:

Primary Bronchi

The major air passages that branch off from the trachea and enter the lungs to facilitate breathing.

Voice Box

The part of the air passage to the lungs that holds the vocal cords; it is responsible for producing sound.

Larynx

The voice box located in the throat, involved in breathing, producing sound, and protecting the trachea against food aspiration.

Trachea

The windpipe, a tube that connects the larynx to the bronchi of the lungs.