An active credit manager anticipates an economic slowdown led by a decline in residential housing prices. Which

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An active credit manager anticipates an economic slowdown led by a decline in residential housing prices. Which of the following portfolio positioning strategies involving structured products is the most appropriate to consider under this scenario?

A. Shift exposure from an A rated tranche of a credit card ABS transaction to a BB rated tranche

B. Increase exposure to an A rated CDO tranche and reduce exposure to a BBB rated CDO tranche

C. Increase exposure to an A rated MBS tranche and decrease exposure to a BBB rated MBS tranche

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Fixed Income Analysis

ISBN: 9781119850540

5th Edition

Authors: Barbara S. Petitt

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Question Posted: Nov 08, 2023 01:43 AM

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An active credit manager anticipates an economic slowdown led by a decline in residential housing prices. Which

Question:

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The correct answer is C As the housing sector slows and default rates rise credit spreads of l...View the full answer

Fixed Income Analysis

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