If the Yield on Mortgage-Backed Securities Was Abnormally Low Compared

question 38

Multiple Choice

If the yield on mortgage-backed securities was abnormally low compared to Treasury bonds,a hedge fund pursuing a relative value strategy would ______.

• A) short sell the Treasury and short sell the mortgage-backed securities
• B) short sell the Treasury and buy the mortgage-backed securities
• C) buy the Treasury and buy the mortgage-backed securities
• D) buy the Treasury and short sell the mortgage-backed securities
• E) C only since short sales are prohibited

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Definitions:

Clumsy

Lacking in coordination, skill, or grace in physical movement or handling things.

Uncoordinated

Lacking the ability to move or react in a smooth, efficient, and purposeful manner, often due to deficiencies in motor control or spatial awareness.

Positron-Emission Tomography (PET)

A nuclear medicine functional imaging technique that produces a three-dimensional image of functional processes in the body.

Biochemical Changes

Alterations in the chemical processes and substances within living organisms.