Series 7 - General Securities Representative Exam

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A short term trader wants to benefit from an inverted yield curve that is expected to continue inversion. What might she do?

Buy short dated bonds buy longer term bonds
A
Sell short dated bonds sell longer term bonds
B
Sell short dated bonds buy longer term bonds
C
Buy short dated bonds sell longer term bonds
D

Explanations

The trader could sell the near and buy the far. This form of arbitrage could work in an inverted yield curve environment

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