The Reason for an Active Bond Portfolio Manager to Swap

question 49

Multiple Choice

The reason for an active bond portfolio manager to swap a bond he owns is when he feels

• A) the present bond is underpriced.
• B) the yield curve will shift upward.
• C) he needs a shorter duration.
• D) the present bond is overpriced.

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Definitions:

Investing Activities

Financial transactions related to the acquisition or sale of long-term assets and other investments not included in cash equivalents.

Operating Activities

Transactions and other events that affect the net income of a business, relating to its principal revenue-producing activities.

Accounting Equation

The fundamental equation of accounting, representing the relationship between assets, liabilities, and owner's equity (Assets = Liabilities + Equity).

Cash Dividend

A payment made by a company out of its profits to its shareholders, typically in the form of cash.