A Substitution Swap Is an Exchange of Bonds Undertaken to

question 43

Multiple Choice

A substitution swap is an exchange of bonds undertaken to

• A) change the credit risk of a portfolio.
• B) extend the duration of a portfolio.
• C) reduce the duration of a portfolio.
• D) profit from apparent mispricing between two bonds.
• E) adjust for differences in the yield spread.

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Definitions:

Heart Rate

The number of heartbeats per unit of time, typically expressed in beats per minute (bpm), indicating cardiovascular activity.

Spinal Cord

A long, thin, tubular structure made up of nervous tissue, which extends from the medulla oblongata in the brainstem to the lumbar region of the vertebral column.

Bridge

A structure built to span physical obstacles without closing the way underneath, such as a body of water, valley, or road, for the purpose of providing passage.

Erection

The process by which erectile tissue fills with blood and becomes firm, typically in response to sexual arousal.