Topic_13_E2 - Topic 13 Exercise 2 Bond Analysis Securities...

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Topic 13 Exercise 2 Bond Swapping Bond swapping is a technique whereby and investor chooses to sell a bond and simultaneously purchase another bond with proceeds from the sale. Since it is relatively easy to find fixed-income securities with similar features in terms of credit quality, coupon rate, maturity and price, investors can take advantage of current market and/or tax conditions to meet specific portfolio goals. These goals could include increasing the quality of the portfolio, increasing the total return, benefiting from interest rate changes and lowering taxes. Read the article on Bond Swapping at the following web address and answer the following queries. Click on the link to “Cross Market Publications” from the main publication location to access the “Bond Swapping” article. Then, answer the following questions: 1. Describe the general situation in which a quality swap from low to higher credit quality bonds might be considered. Since the spread between the yields of bonds with different credit quality generally
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This note was uploaded on 10/28/2009 for the course MBA MBA608 taught by Professor Martin during the Spring '09 term at Beirut Arab University.

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Topic_13_E2 - Topic 13 Exercise 2 Bond Analysis Securities...

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