Question: Why is the duration times spread approach superior to the spread duration
Why is the duration-times-spread approach superior to the spread duration approach in estimating exposure to changes in corporate credit spreads?
Answer to relevant QuestionsAnswer the below questions. (a) Corporate bond prices have interest-rate exposure and equity exposure. Why? (b) What type of corporate bond is more likely to have greater equity exposure, investment-grade bonds or high-yield ...Explain what a credit analyst should do in preparation for an analysis of the financial statements. Why do analysts of high-yield corporate bonds feel that the analysis should be viewed from an equity analyst’s perspective? With respect to corporate governance, what are the mechanisms that can mitigate the likelihood that management will act in its own self-interest? Why is the calibration of a credit risk model to the market important in fixed income trading?
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