AIWMI CCRA-L2 Exam - Topic 7 Question 43 Discussion

Question

The following information pertains to bonds:

Further following information is available about a particular bond 'Bond F'

There is a 10.25% risky bond with a maturity of 2.25% year(s) its current price is INR105.31, which corresponds to YTM of 9.22%. The following are the benchmark YTMs.

From the time January 2013 to April 2013, what can you predict about the market conditions, assuming the GSec has not changed?

Avery · Accepted Answer

C) There has been widening of credit spread, which means the spreads have increased, which can be lead indicator of oncoming economy stress.

Avery · Answer

A) There has been credit spread compression, which means the spreads have declines, which can be lead indicator of oncoming economy stress.

Avery · Answer

B) There has been widening of credit spread, which means the spreads have increased, which can be lead indicator of oncoming economy stress.

Avery · Answer

D) There has been credit spread compression, which means the spreads have declines, which can be lead indicator of oncoming economy boom.