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Which of the following statements may justify the need for buying a Negative Yield Bond?
Investment Funds have to meet certain requirements, including asset allocation.
Foreign investors buy the negative yield bond in anticipation of the rise in the currency’s exchange rate.
When there is inflation, investors look to buy a Negative Yield Bond.
Negative yield bonds might sometimes result in fewer losses than those in the equity markets.
Select the correct answer using the codes given below:
- a)1 and 3 only
- b)1, 2 and 4 only
- c)2, 3 and 4 only
- d)1, 2, 3 and 4
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Which of the following statements may justify the need for buying a N...
The correct answer is option 'B' - 1, 2, and 4 only. Let's analyze each statement to understand why it justifies the need for buying a Negative Yield Bond:
1. Investment Funds have to meet certain requirements, including asset allocation: Investment funds, such as mutual funds or pension funds, have specific requirements regarding asset allocation. These requirements may include diversification across different asset classes and a certain proportion of fixed income investments. Negative yield bonds, despite offering a low or negative return, can still be included in a fund's portfolio to meet these allocation requirements.
2. Foreign investors buy the negative yield bond in anticipation of the rise in the currency’s exchange rate: Foreign investors may purchase negative yield bonds with the expectation that the currency's exchange rate will appreciate. In such cases, even if the bond offers a negative yield, the potential gain from the currency appreciation can offset the loss.
3. When there is inflation, investors look to buy a Negative Yield Bond: Inflation erodes the purchasing power of money over time. During periods of high inflation, investors may opt to buy negative yield bonds as a means of preserving capital rather than investing in assets with potentially higher losses, such as equity markets.
4. Negative yield bonds might sometimes result in fewer losses than those in the equity markets: Negative yield bonds, despite providing low or negative returns, can still be considered a relatively safer investment compared to equity markets. During times of market volatility or economic uncertainty, investors may prefer the stability and preservation of capital offered by negative yield bonds.
Overall, these statements highlight various scenarios in which buying negative yield bonds can be justified. It is important to note that the decision to invest in negative yield bonds should be based on the specific investment objectives, risk tolerance, and market conditions of individual investors or investment funds.
1. Investment Funds have to meet certain requirements, including asset allocation: Investment funds, such as mutual funds or pension funds, have specific requirements regarding asset allocation. These requirements may include diversification across different asset classes and a certain proportion of fixed income investments. Negative yield bonds, despite offering a low or negative return, can still be included in a fund's portfolio to meet these allocation requirements.
2. Foreign investors buy the negative yield bond in anticipation of the rise in the currency’s exchange rate: Foreign investors may purchase negative yield bonds with the expectation that the currency's exchange rate will appreciate. In such cases, even if the bond offers a negative yield, the potential gain from the currency appreciation can offset the loss.
3. When there is inflation, investors look to buy a Negative Yield Bond: Inflation erodes the purchasing power of money over time. During periods of high inflation, investors may opt to buy negative yield bonds as a means of preserving capital rather than investing in assets with potentially higher losses, such as equity markets.
4. Negative yield bonds might sometimes result in fewer losses than those in the equity markets: Negative yield bonds, despite providing low or negative returns, can still be considered a relatively safer investment compared to equity markets. During times of market volatility or economic uncertainty, investors may prefer the stability and preservation of capital offered by negative yield bonds.
Overall, these statements highlight various scenarios in which buying negative yield bonds can be justified. It is important to note that the decision to invest in negative yield bonds should be based on the specific investment objectives, risk tolerance, and market conditions of individual investors or investment funds.
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Which of the following statements may justify the need for buying a Negative Yield Bond? Investment Funds have to meet certain requirements, including asset allocation. Foreign investors buy the negative yield bond in anticipation of the rise in the currency’s exchange rate. When there is inflation, investors look to buy a Negative Yield Bond. Negative yield bonds might sometimes result in fewer losses than those in the equity markets. Select the correct answer using the codes given below:a)1 and 3 onlyb)1, 2 and 4 onlyc)2, 3 and 4 onlyd)1, 2, 3 and 4Correct answer is option 'B'. Can you explain this answer?
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Which of the following statements may justify the need for buying a Negative Yield Bond? Investment Funds have to meet certain requirements, including asset allocation. Foreign investors buy the negative yield bond in anticipation of the rise in the currency’s exchange rate. When there is inflation, investors look to buy a Negative Yield Bond. Negative yield bonds might sometimes result in fewer losses than those in the equity markets. Select the correct answer using the codes given below:a)1 and 3 onlyb)1, 2 and 4 onlyc)2, 3 and 4 onlyd)1, 2, 3 and 4Correct answer is option 'B'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which of the following statements may justify the need for buying a Negative Yield Bond? Investment Funds have to meet certain requirements, including asset allocation. Foreign investors buy the negative yield bond in anticipation of the rise in the currency’s exchange rate. When there is inflation, investors look to buy a Negative Yield Bond. Negative yield bonds might sometimes result in fewer losses than those in the equity markets. Select the correct answer using the codes given below:a)1 and 3 onlyb)1, 2 and 4 onlyc)2, 3 and 4 onlyd)1, 2, 3 and 4Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements may justify the need for buying a Negative Yield Bond? Investment Funds have to meet certain requirements, including asset allocation. Foreign investors buy the negative yield bond in anticipation of the rise in the currency’s exchange rate. When there is inflation, investors look to buy a Negative Yield Bond. Negative yield bonds might sometimes result in fewer losses than those in the equity markets. Select the correct answer using the codes given below:a)1 and 3 onlyb)1, 2 and 4 onlyc)2, 3 and 4 onlyd)1, 2, 3 and 4Correct answer is option 'B'. Can you explain this answer?.
Which of the following statements may justify the need for buying a Negative Yield Bond? Investment Funds have to meet certain requirements, including asset allocation. Foreign investors buy the negative yield bond in anticipation of the rise in the currency’s exchange rate. When there is inflation, investors look to buy a Negative Yield Bond. Negative yield bonds might sometimes result in fewer losses than those in the equity markets. Select the correct answer using the codes given below:a)1 and 3 onlyb)1, 2 and 4 onlyc)2, 3 and 4 onlyd)1, 2, 3 and 4Correct answer is option 'B'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which of the following statements may justify the need for buying a Negative Yield Bond? Investment Funds have to meet certain requirements, including asset allocation. Foreign investors buy the negative yield bond in anticipation of the rise in the currency’s exchange rate. When there is inflation, investors look to buy a Negative Yield Bond. Negative yield bonds might sometimes result in fewer losses than those in the equity markets. Select the correct answer using the codes given below:a)1 and 3 onlyb)1, 2 and 4 onlyc)2, 3 and 4 onlyd)1, 2, 3 and 4Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements may justify the need for buying a Negative Yield Bond? Investment Funds have to meet certain requirements, including asset allocation. Foreign investors buy the negative yield bond in anticipation of the rise in the currency’s exchange rate. When there is inflation, investors look to buy a Negative Yield Bond. Negative yield bonds might sometimes result in fewer losses than those in the equity markets. Select the correct answer using the codes given below:a)1 and 3 onlyb)1, 2 and 4 onlyc)2, 3 and 4 onlyd)1, 2, 3 and 4Correct answer is option 'B'. Can you explain this answer?.
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