Question

Is the following statement true or false:  "The correlation between (U.S.) stock market returns and long-term U.S. treasury bond returns is generally negative during times when equity markets are crashing."

True

False

Is the following statement true or false: " Consider a strategy that buys 1-year US treasury bonds, holds them to maturity, and uses the proceeds from the maturing bonds to buy new 1-year bonds. In this case, the actual/realized returns is uncertain, but it is always positive."

True

False

What does the flight-to-safety feature of government bonds imply? Choose all that apply.

	A.	Government bonds tend to provide negative returns during periods during crisis periods (e.g., when the equity market is falling).
	B.	Government bonds tend to provide positive returns during crisis periods (e.g., when the equity market is falling).
	C.	Government bonds can be sold at (or close to) fair value and with low transactions costs even during crisis periods (e.g., when the equity market is falling).
	D.	You should buy government bonds when a crisis hits equity markets

Answer 1