A portfolio manager sells Treasury bonds and buys corporate bonds because the spread between corporate- and Treasury-bond yields is higher than its historical average. This is an example of ________ swap.

Question

Quizplus · Accepted Answer

This is an example of an intermarket spread swap, where the portfolio manager is taking advantage of the difference in yield spreads between two different markets (in this case, Treasury and corporate bonds) that is higher than its historical average.

A Portfolio Manager Sells Treasury Bonds and Buys Corporate Bonds