1. If a bond is callable, what is the likely impact on the Z-spread?
A. Z-spread is smaller.
B. Z-spread is larger.
C. No effect on the Z-spread.
2. Assume the location and shape of the yield curve is not expected to change. “Riding the yield curve” will be a profitable strategy if the yield curve is:
A. positively sloped.
B. negatively sloped.
C. flat.