You Find a 5-Year AA Xerox Bond Priced to Yield

question 57

Multiple Choice

You find a 5-year AA Xerox bond priced to yield 6%. You find a similar-risk 5-year Canon bond priced to yield 6.5%. If you expect interest rates to rise, which of the following should you do?

• A) Short the Canon bond, and buy the Xerox bond.
• B) Buy the Canon bond, and short the Xerox bond.
• C) Short both the Canon bond and the Xerox bond.
• D) Buy both the Canon bond and the Xerox bond.

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Definitions:

NLRA

The National Labor Relations Act, a foundational statute in United States labor law that protects the rights of employees to organize, bargain collectively, and engage in other concerted activities for mutual aid or protection.

Strike Replacements

Workers hired by employers to perform the duties of striking employees during a labor strike.

Organized Labor

Constitutes labor unions and labor organizations that aim to improve workers' conditions, wages, and rights through collective action and negotiation.

NLRA

The National Labor Relations Act, a foundational statute in United States labor law that protects the rights of employees to organize and bargain collectively.