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NEW QUESTION: 1
Toni Morrison, CFA, a manager for Sierra Fund, is investigating the use of relative value methodologies for global corporate bond portfolio management. As a recent college graduate, Bernard Tabler has been assisting Morrison in data gathering and analysis.
Morrison is a firm believer that corporate yield spreads have a tendency to revert to their historical mean values. Accordingly, Tabler has compiled relevant information for three corporate issues. Morrison and Tabler use the information below to conduct mean reversion analysis.

Note: All spreads are expressed in basis points.
Morrison's research has also included a study of the implications of secular and cyclical changes in the primary corporate bond market. As a result of her research, she states that the implication of both cyclical and secular changes in the primary corporate bond market for fixed-income portfolio management is that effective duration and aggregate interest rate risk will increase. Tabler adds that it also appears that credit- based derivatives will increasingly be used to achieve desired exposure to credit sectors, issuers, and structures.
During the presentation to a client, Morrison discusses corporate curve analysis. He states that corporate spread curves tend to change with the economic cycle, so in order to properly conduct this analysis the analyst must examine credit and yield curves carefully. Tabler adds that corporate spreads usually narrow during upturns and widen during downturns.
Morrison is also considering using repurchase agreements to fund some overnight investment activities.
Watching the financial news, she observes that the Federal Reserve has increased the federal funds rate to combat potential inflation. She notes that this will increase the borrowing costs of investment strategies using repurchase agreements. Tabler chimes in that the strategy's interest cost could be reduced by using hot collateral such as on-the-run U.S. Treasuries.
Morrison is also providing advice to a client on the best way to hedge a floating rate loan using a swap.
The client is paying 120 basis points over LIBOR. Morrison suggests that the client enter a 5-year LIBOR- based swap. The swap fixed rate is 100 basis points over the U.S. Treasury rate. The floating rate is LIBOR flat. LIBOR is 5.60% and the Treasury rate is 5.20% when this swap is being considered.
Regarding their statements on investment strategies using repurchase agreements, are Morrison and Tabler correct or incorrect?
A. Both are correct.
B. Only Tabler is correct.
C. Only Morrison is correct.
Answer: A
Explanation:
Explanation/Reference:
Explanation:
Both Morrison and Tabler are correct. There is a positive relationship berween the federal funds rate and the rcpo rate. The use of collateral with limited ability decreases the repo rate. Furthermore, as credit quality and liquidity increase, the repo rate declines. As the term decreases, the repo rate decreases.
Lastly, the repo rate will be lower if the collateral is delivered to the lender, rather than to the borrower's bank. (Study Session 10, LOS 3 I.b)

NEW QUESTION: 2
View the rule below. What does the lock-symbol in the left column mean? Select the BEST answer.

A. The current administrator has read-only permissions to Threat Prevention Policy.
B. Another user has locked the rule for editing.
C. Configuration lock is present. Click the lock symbol to gain read-write access.
D. The current administrator is logged in as read-only because someone else is editing the policy.
Answer: B
Explanation:
Administrator Collaboration
More than one administrator can connect to the Security Management Server at the same time. Every administrator has their own username, and works in a session that is independent of the other administrators.
When an administrator logs in to the Security Management Server through SmartConsole, a new editing session starts. The changes that the administrator makes during the session are only available to that administrator. Other administrators see a lock icon on object and rules that are being edited.
To make changes available to all administrators, and to unlock the objects and rules that are being edited, the administrator must publish the session.

NEW QUESTION: 3
How is an SLE derived?
A. % of AV - implementation cost
B. (Cost - benefit) x (% of Asset Value)
C. ARO x EF
D. AV x EF
Answer: D
Explanation:
The correct answer is AV x Ef. A Single Loss Expectancy is derived by multiplying the
Asset Value with its Exposure Factor. The other answers do not exist.


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