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:

Chromosomes

Structures composed of DNA and proteins found in the nucleus of most living cells, carrying genetic information in the form of genes.

Prometaphase

Phase of cell division that occurs between prophase and metaphase and is characterized by attachment of the spindle fibers to the kinetochores of each sister chromatid.

Metaphase

A stage of mitosis in cell division where chromosomes line up in the middle of the cell before being separated into two new cells.

Prophase

First phase of mitosis; characterized by the condensation of the chromatin; chromosomes are visible, but scattered in the nucleus.