If You Expected Interest Rates to Fall,you Would Prefer to Own

question 76

Multiple Choice

If you expected interest rates to fall,you would prefer to own bonds with

• A) long durations and high convexity.
• B) long durations and low convexity.
• C) short durations and high convexity.
• D) short durations and low convexity.
• E) none of the above.

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Definitions:

Bidders Values

The subjective valuations that individual bidders assign to the item being auctioned.

Bid-rigging Cartel

A bid-rigging cartel involves a group of firms colluding to manipulate the outcome of a bidding process to ensure a particular member wins, undermining fair competition.

Winning Bid

The highest offer made in an auction that ultimately leads to the purchase of the item or asset up for bidding.

Bidders Values

The individual valuations that bidders assign to the item for auction based on their personal or company interests.