A Bond Portfolio Manager Notices a Hump in the Yield

question 59

Multiple Choice

A bond portfolio manager notices a hump in the yield curve at the 5-year point. How might a bond manager take advantage of this event?

• A) Buy the 5-year bonds, and short the surrounding maturity bonds.
• B) Buy the 5-year bonds, and buy the surrounding maturity bonds.
• C) Short the 5-year bonds, and short the surrounding maturity bonds.
• D) Short the 5-year bonds, and buy the surrounding maturity bonds.

---

Definitions:

Wrongfully Refuses

An unjust denial or rejection of a right, demand, or claim, often used in legal contexts.

Reclaim

The process of recovering materials or substances from waste or by-products for reuse or recycling.

Resell

The act of selling an item or property previously purchased, to another buyer.

Repudiating Party

In contract law, the party who refuses to fulfill their contract obligations, effectively rejecting the contract.