When using the percentage change in the credit spread as a measure of the credit spread change, what assumption is being made?
Answer to relevant QuestionsA portfolio manager currently has a portfolio consisting solely of investment-grade corporate bonds with an analytically computed duration of 6.6. The portfolio manager wants to sell 20% of the portfolio holdings and invest ...What does the empirical evidence suggest about the behavior of corporate credit spreads concerning whether credit spread changes should be measured on an absolute versus relative basis? (a) What is meant by the empirical duration of a corporate bond? (b) How is the empirical duration of a corporate bond estimated? In the analysis of net assets, what factors should be considered? The underlying economic theory regarding many corporate governance issues is the principal-agency relationship between the senior managers and the shareholders of corporations. Explain this relationship.
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