BOB Module 5

The difference in repricing of interest rate sensitive assets and liabilities is called:

• Open Position

• Gap

• Opportunity

The excess return from a long dated bond above the expected return from a series of consecutive shorter dated bond investments is called _.

• Term Premium

• Safe Haven Premium

• Equity Risk Premium

Directional trading will usually result to:

• Volatile Revenue Stream

• Small, Consistent Returns

• Large, Consistent Returns

The difference between the price a dealer is willing to buy and sell a security is called:

• Trader's Commission

• Broker's Commission

• Bid-Offer Spread

The strategy that seeks to profit by providing liquidity to counterparties and gaining the bid-ask spread is called:

• Market Making

• Make It / Take It

• Mark to Market

Market makers and dealerships seek to profit mainly from providing liquidity and :

• Warehousing Risk

• Predicting the Direction the Market Is Going

• Accrual Income

The strategy of taking the accrual gains and the price appreciation of the bond as it moves to a lower/shorter maturity point is called the

• Rock and Roll

• Rice or Roll

• Carry and Roll

An event that is outside the realm of expectations and has significant consequences is called:

• White Elephant

• Black Swan

• Grey Area

A situation when the price of an asset rises rapidly without underlying fundamentals is called:

• Breakout

• Rally

• Bubble

The idea that the market incorporates all important information into current prices is called:

• Long Run Equilibrium

• Efficient Market Hypothesis

• Discounted Cash Flows