There Are Several Related Reasons for the Transition to the Electronic

question 44

Multiple Choice

There are several related reasons for the transition to the electronic trading of bonds. Which of the below reasons is NOT one of these?

• A) The profitability of bond market making has declined since many of the products have become less commodity-like.
• B) The increase in the volatility of bond markets has increased the capital required of bond broker-dealers.
• C) Making markets in bonds has become more risky for the market makers because the size of the orders has increased tremendously.
• D) The profitability of bond market making has declined and their bid-offer spreads have decreased.

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Definitions:

Alternative Hypothesis

The hypothesis that suggests there is an effect or difference, in contrast to the null hypothesis.

P-Value

The probability of observing a test statistic at least as extreme as the one observed, under the assumption that the null hypothesis is true.

Sign Test

An approach that doesn't rely on parameter assumptions to check for differences in the median of paired samples.

Nonzero Differences

Nonzero differences refer to outcomes or results in an analysis that indicate a variation or change from a reference point that is not equal to zero.