Why is a portfolio manager concerned with more than default risk when assessing a portfolio’s credit exposure?
Answer to relevant QuestionsWhat are convertible bonds and exchangeable bonds? What is meant by a CUSIP number, and why is it important? Suppose that you purchased a debt obligation three years ago at its par value of $100,000 and nine years remaining to maturity. The market price of this debt obligation today is $90,000. What are some reasons why the price ...How can a client determine if a portfolio manager is using a CDS for leveraging in such a way as to increase the portfolio’s risk relative to a bond index? Comment on the following statement: “Restructuring is included in credit default swaps and therefore the reduction in a reference obligation’s interest rate will result in the triggering of a payout. This exposes the ...
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