The Following Information Relates to Questions 1-6
Cécile Perreaux Is

question 5

Multiple Choice

The following information relates to Questions 1-6
Cécile Perreaux is a junior analyst for an international wealth management firm. her supervi-sor, Margit daasvand, asks Perreaux to evaluate three fixed-income funds as part of the firm's global fixed-income offerings. Selected financial data for the funds aschel, Permot, and rosaiso are presented in exhibit 1. in Perreaux's initial review, she assumes that there is no reinvestment income and that the yield curve remains unchanged.
EXHIBIT 1 Selected Data on Fixed-Income Funds
$\begin{array}{l}\begin{array}{lr}&\text { Aschel }\\\hline \text { Current average bond price } & \$ 117.00 \\\text { Expected average bond price in one year (end of Year 1) } & \$ 114.00 \\\text { Average modified duration } & 7.07 \\\text { Average annual coupon payment } & \$ 3.63 \\\text { Present value of portfolio's assets (millions) } & \$ 136.33 \\\text { Bond type* } & \\\text { Fixed-coupon bonds } & 95 \% \\\text { Floating-coupon bonds } & 2 \% \\\text { Inflation-linked bonds } & 3 \% \\\text { Quality* } & \\\text { AAA } & 65 \% \\\text { BBB } & 35 \%\end{array}\begin{array}{rr}\text { Permot } & \text { Rosaiso } \\\hline \$ 91.50 & \$ 94.60 \\\$ 96.00 & \$ 97.00 \\7.38 & 6.99 \\\$ 6.07 & \$ 6.36 \\\$ 68.50 & \$ 74.38\\\\38 \% & 62 \% \\34 \% & 17 \% \\28 \% & 21 \%\\\\15 \% & 20 \% \\65 \% & 50 \%\\&\text { (continued) }\end{array}\end{array}$


after further review of the composition of each of the funds, Perreaux notes the following.
note 1: aschel is the only fund of the three that uses leverage.note 2: rosaiso is the only fund of the three that holds a significant number of bonds with embedded options.daasvand asks Perreaux to analyze immunization approaches to liability-based mandates for a meeting with villash foundation. villash foundation is a tax-exempt client. Prior to the meeting, Perreaux identifies what she considers to be two key features of a cash flow-matching approach.
feature 1: it requires no yield curve assumptions.
feature 2: Cash flows come from coupons and liquidating bond portfolio positions.two years later, daasvand learns that villash foundation needs $5,000,000 in cash to meet liabilities. She asks Perreaux to analyze two bonds for possible liquidation. Selected data
on the two bonds are presented in exhibit 2.
$$\text { EXHIBIT } 2 \text { Selected Data for Bonds } 1 \text { and } 2$$

$\begin{array}{l}\begin{array}{lc}&\text { Bond } 1\\\hline \text { Current market value } & \$ 5,000,000 \\\text { Capital gain/loss } & 400,000 \\\text { Coupon rate } & 2.05 \% \\\text { Remaining maturity } & 8 \text { years } \\\text { Investment view } & \text { Overvalued } \\\text { Income tax rate } & \\\text { Capital gains tax rate }\end{array}\begin{array}{cc} & \text { Bond 2 } \\\hline& \$ 5,000,000 \\& -400,000 \\& 2.05 \% \\& 8 \text { years } \\& \text { Undervalued } \\39 \% & \\30 \% &\\\end{array}\end{array}$
-is Perreaux correct with respect to key features of cash flow matching?

Understand the basic principles and types of conditioning.

Recognize the impact of reinforcement schedules on behaviors.

Differentiate between the effects of positive and negative reinforcers.

Identify the phenomena of generalization and discrimination in conditioning.

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Definitions:

Mastery Orientation

A focus on learning, understanding, and mastering the material or task at hand, rather than merely performing well.

Helpless Orientation

A psychological state characterized by a perceived lack of control over outcomes, leading to passive behavior.

Learned Helplessness

A condition in which an individual learns to believe that they are powerless to change their situation or outcomes, often following repeated failures or uncontrollable negative events.

Reformulated Model

A reformulated model refers to a revised or updated version of a theoretical model that incorporates new data, insights, or perspectives to improve its accuracy or relevance.