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

question 24

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 bonds and short sell the mortgage-backed securities
• B)short sell the Treasury bonds and buy the mortgage-backed securities
• C)buy the Treasury bonds and buy the mortgage-backed securities
• D)buy the Treasury bonds and short sell the mortgage-backed securities
• E)none of the above

---

Definitions:

Partially Crystallized

A state in which a substance has begun to form a crystalline structure but has not fully completed the process.

Chamber's Rock Walls

The solid, often vertical, rock faces forming the sides of geological chambers or cavities.

Mantle Plume

A rising column of hot, solid mantle material that originates from deep within the Earth, potentially causing volcanic activity when it reaches the surface.

Less Dense

This term refers to a material that has a lower density, meaning fewer mass units per volume, making it more buoyant or likely to float in a denser substance.