The following information relates to Questions 49-57liz Tyo is a fund manager for an actively managed global fixed-income fund that buys bonds
issued in Countries A, b, and
-based on the given Z-spreads for bonds 1, 2, and 3, which bond has the greatest credit and liquidity risk?
A) bond 1
B) bond 2
C) bond 3

Question

Quizplus · Accepted Answer

The Z-spread is a measure of the spread of a bond over the yield curve of zero-coupon securities. A higher Z-spread indicates a higher yield required by investors to compensate for the bond's credit and liquidity risk. Therefore, the bond with the highest Z-spread (Bond 3) has the greatest credit and liquidity risk.

The Following Information Relates to Questions 49-57liz Tyo Is a Fund