Why Are the Class C Bonds Highly Attractive to Insurance

question 106

Multiple Choice

Why are the class C bonds highly attractive to insurance companies and pension funds?

• A)Because of their ability to offer perfect prepayment protection.
• B)Because of the shortest average life with a minimum of prepayment protection.
• C)Because of their long expected duration.
• D)Because they are basically zero coupon bonds and hence carry a minimum amount of risk.
• E)Answers A and D only.

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