A pure yield pickup swap involves swapping out of a
A) bond to realize capital losses into a comparable bond.
B) low coupon bond into a comparable high coupon bond.
C) high coupon bond into a comparable low coupon bond.
D) bond that is underpriced into a comparable bond that is overpriced.
E) bond that is overpriced into a comparable bond that is underpriced.

Question

Quizplus · Accepted Answer

A pure yield pickup swap involves moving from a bond with a lower yield (often associated with a lower coupon) to a bond with a higher yield (often associated with a higher coupon), without changing the bond's maturity significantly. This is done to increase the income from the investment.

A Pure Yield Pickup Swap Involves Swapping Out of a