Why Do Garbage Class Bonds Often Have a Negative Duration

question 32

Multiple Choice

Why do garbage class bonds often have a negative duration?

• A)The value of the returns in this bond class increases when interest rates increase.
• B)It gives the rights to collateralization.
• C)Bond values fall with interest rate increases.
• D)It gives rights to reinvestment income on the cash flows in the CMO trust.

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Definitions:

Dissociative Fugue

A rare psychiatric disorder characterized by amnesia and sudden unexpected travel away from one's home or workplace.

Dissociative Amnesia

is a psychological condition where an individual experiences memory loss that cannot be attributed to normal forgetfulness, often related to traumatic or stressful events.

Depersonalization

An abnormality in self-awareness where individuals feel detached from their thoughts, feelings, or physical body.

Body Dysmorphic Disorder

A disorder in which individuals become preoccupied with the belief that they have certain defects or flaws in their physical appearance. The perceived defects or flaws are imagined or greatly exaggerated.