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NEW QUESTION: 1
Martha Garret, CFA, manages fixed income portfolios for Jones Brothers, Inc. (JBI). JBI has been in the portfolio management business for over 23 years and provides investors with access to actively managed equity and fixed-income portfolios. All of JBI's fixed-income portfolios are constructed using U.S. debt instruments. Garret's primary portfolio responsibilities are the Quasar Fund and the Nova Fund, both of which are long fixed-income portfolios consisting of Treasury securities in all maturity ranges. The Quasar Fund holdings as of March 15 are provided in Exhibit 1. A comparison of key rate durations for the Quasar Fund and Nova Fund is provided in Exhibit 2.
Of particular importance to Garret and her colleagues is the degree of interest rate risk exposure unique to each portfolio under JBI's management. Driving the increased awareness of the portfolios' interest rate exposure is the double digit growth in assets under management that JBI's fixed-income portfolios have experienced in the last five years. Interest in the company's fixed-income portfolios continues to grow and as a result, all portfolio managers are required to attend weekly meetings to discuss key portfolio risk factors. At the last meeting, Miranda Walsh, a principal at JBI, made the following comments:
"The variance of daily interest rate changes has been trending higher over the last three months leading us to believe that a period of high volatility is approaching in the next twelve to eighteen months. However, the reliability is questionable since the volatility estimates were derived using an option pricing model, which assumes constant interest rates."
"Also, the Treasury spot rate curve currently has a similar shape to the yield curve on Treasury coupon securities, which, according to the market segmentation theory of interest rate term structure, indicates a relatively high level of demand from investors for intermediate term securities. Overzealous trading by investors unwilling to move into other maturity ranges may create mispricing and opportunities for arbitrage." After the meeting, Walsh and JBI's other principals met to discuss a new international portfolio opportunity.
At Walsh's suggestion, the principals selected Garret as the lead portfolio manager for the new fund, which will be titled the Atlantic Fund. One of the other portfolio managers, Greg Terry, CFA, suggested to Garret that she utilize the LIBOR swap curve as a benchmark for the Atlantic fund rather than using local government yield curves. Terry justifies his suggestion by claiming that "the lack of government regulation in the swap market makes swap rates and curves directly comparable between different countries despite fewer maturity points with which to construct the curve as compared to a government yield curve.
Furthermore, credit risk in the swap curves of various countries is similar, thus avoiding the complications associated with different levels of sovereign risk embedded in government yield curves." Intrigued by the idea of using the swap curve, Garret has her assistant begin gathering a range of current and forward LIBOR rates.
Assume that Bond A is currently callable at 105 and will be callable at 103 in six months. If the yield curve experiences a negative butterfly shift over the next month, which of the following results is most likely to be observed?
A. The bond will experience a larger price decrease than Bond C.
B. The bond will become attractive to long-term investors.
C. The bond will experience price compression.
Answer: C
Explanation:
Explanation/Reference:
Explanation:
Bond A is priced at par value. A negative butterfly shift would increase the humped nature of the yield curve, either through a bigger increase in intermediate rates than short and long rates or a smaller decrease in intermediate rates than short- and long-term rates. Because Bond A has a much lower duration than Bond C, a yield curve shift would have more of a price impact on Bond C than Bond A Long- term investors would not be drawn to such a short-term bond unless the yield shift created significant mispricing, which is unlikely. Choice C is the only answer that accurately reflects a possible result of a negative butterfly shift. Bond A would increase in price if the shift saw short-term rates falling more than intermediate rates. The increase in price will be limited, however, by the call price and thus the callable bond would experience price compression (usually observed at low interest rates). The interest rate decrease would be consistent with a negative butterfly shift. (Study Session 14, LOS 53.a)
NEW QUESTION: 2
When the default active Content Manager fails, which of the following occurs?
A. Users are prompted to rerun failed requests on the initial Content Manager once it is back on line.
B. The system automatically activates all standby Content Managers and spreads the load of requests across them all.
C. The system automatically switches to a standby Content Manager, and requests are directed to it.
D. The system automatically activates all standby Content Managers, and spreads the load of requests based on the Weighted Round Robin load balancing mode.
Answer: C
NEW QUESTION: 3
A system administrator needs to create a cell for a test environment. The administrator uses the Profile Management Tool (PMT) to create the deployment manager profile using the advanced profile creation option and creates a custom profile using the typical profile creation option. The administrator examines the log files for the custom profile creation and sees an INSTCONFFAIL message indicating the deployment manager was not running during the custom profile creation.
How should the administrator fix this?
A. Run the addNode command to federate the custom profile.
B. Use the syncNode command to synchronize the node.
C. Start the deployment manager.Use PMT to re-create the custom profile.
D. Delete the custom profile.Start the deployment manager.Create the custom profile again.
Answer: D
Explanation:
Deleting profiles. You can delete a profile using the manageprofiles command. If the command fails, you can delete the profile using operating system commands.
Before you begin: If a node within a profile is federated to a deployment manager, before you delete the profile, stop the node and remove the node from the deployment manager.
Otherwise, an orphan node remains in the deployment manager.
References:
https://www.ibm.com/support/knowledgecenter/en/SSAW57_8.5.5/com.ibm.websphere.nd.
doc/ae/tpro_removeprofile.html
NEW QUESTION: 4
Which of the following statements regarding the WAAS vendor landscape is not true?Riverbed is the market leader.
A. Riverbed lacks routing functionality.
B. The benefits of Cisco WAAS include scalability, the comprehensive product portfolio, and VDI vendor- validated optimization.
C. Bluecoat is number two in the WAAS market.
D. Riverbed is the market leader.
Answer: C
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