1. Advantages of investing in U. S. Treasury Notes include which of the following?
I. Interest is exempt from Federal, state, and local income taxes.
II. They are free of reinvestment risk.
III. They are virtually default free.
IV. They serve as a proxy for the Risk Free Rate of Return.
I only
III only
III and IV
I and III
I, III, and IV
2. Which of the following statements is true?
I. Duration is employed to match a portfolio of fixed income securities with differing coupon rates and maturity dates in the portfolio to the investor's time horizon
II. An immunization strategy protects a portfolio from interest rate and reinvestment risk
III. An immunization strategy is only effective in fixed income portfolio management when interest rates decline
I only
II only
III only
II and III only
I, and II