Portfolio Strategy
When interest rates rise, this portfolio strategy allows an investor to reinvest maturing securities at higher yields over time.
What is laddering?
When the Federal Reserve lowers interest rates, existing fixed-rate bonds generally...
What is increase in value?
California has this many counties.
What is 58?
A bond held to maturity can still experience significant market value fluctuations before it matures.
What is Fact ?
This event in March 2020 prompted the Federal Reserve to cut interest rates to nearly zero and launch massive emergency lending programs.
What is the COVID-19 pandemic?
Which investment generally has the higher yield?
What is a Corporate Bond?
A portfolio manager expects interest rates to decline over the next 12 months. Within California Government Code, the manager would generally be expected to do this.
What is extend the portfolio maturity (duration)?
If unemployment rises while inflation falls toward target, the Fed is generally more likely to...
What is lower interest rates?
California produces over 90% of the U.S. supply of this fruit, commonly dried for snacks.
What are raisins?
U.S. Treasury securities have no interest-rate risk.
What is Fiction ?
During March 2020, the yield on the 10-year Treasury briefly fell below this level for the first time ever.
What is 0.50%?
Which would you rather own if you expected rates to rise?
What is a Money Market Fund?
A security offers the highest yield in the portfolio but has a lower credit rating than the agency's policy permits. The manager should.
What is not purchase the security?
The yield curve inverts when...
What is short-term interest rates are higher than long-term interest rates?
This California reservoir is the largest by water storage capacity.
What is Shasta Lake?
If the Federal Reserve cuts the federal funds rate, all Treasury yields immediately fall by the same amount.
What is Fiction?
This regional bank's collapse in March 2023 became the second-largest bank failure in U.S. history and was largely driven by unrealized losses on long-duration securities combined with a bank run.
What is Silicon Valley Bank?
Your agency won't need the money for four years, and the market expects the Federal Reserve to cut rates three times over the next year. Which would you choose?
What is 5-Year Treasury Ladder?
The portfolio has adequate liquidity for the next three years. The yield curve is positively sloped. Which maturity range would generally provide the greatest opportunity to lock in higher yields?
What is the longer end of the allowable maturity range (up to five years)?
Historically, one of the most reliable market indicators preceding many U.S. recessions has been...
What is an inverted yield curve?
California has this many incorporated cities and towns.
What is 483?
Money market funds are designed to maintain a stable share price but are not guaranteed by the FDIC.
What is Fact ?
The Federal Reserve raised the federal funds rate from near zero to over 5% in roughly this amount of time.
What is about 16 months (March 2022–July 2023)?
Which has historically been the better predictor of recessions?
What is the Yield Curve?
A portfolio's duration is 4.2 years. Interest rates immediately fall by 1.00%. Ignoring convexity, approximately how much would the portfolio's market value change?
What is an increase of approximately 4.2%?
The Federal Reserve can reduce long-term interest rates without changing the federal funds rate by purchasing longer-term Treasury securities through this type of policy.
What is Quantitative Easing (QE)?
This California county consistently produces the highest total agricultural value in the nation.
What is Tulare County?
Higher interest rates are always bad for bond investors.
What is Fiction?
Despite the 2008 Global Financial Crisis originating in the United States, investors around the world rushed into this asset, driving its yields sharply lower.
What are U.S. Treasuries?
Which generally has more liquidity?
What is a Treasury?