If the Invoice Price of Bond a Is 122,the Invoice

question 17

True/False

If the invoice price of bond A is 122,the invoice price of bond B is 95,the adjusted spot price of bond A is 127 and the adjusted spot price of bond B is 97,the better bond to deliver is bond B.

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Definitions:

Systematic Risk

The risk inherent to the entire market or an entire market segment, which cannot be mitigated through diversification.

Asset Specific Risk

The risk of loss associated with a particular asset, different from market risk.

Portfolio Diversification

A risk management technique that mixes a wide variety of investments within a portfolio.

S&P/TSX 60 Index

A stock market index of 60 large companies listed on the Toronto Stock Exchange, representing leading sectors in Canada.