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Basic Question 7 of 7
The process of reconstitution continues until:
B. the price of the Treasury security does not vary materially from the arbitrage-free value.
C. the Treasury puts a stop to the process.
A. all Treasury security dealers earn an arbitrage profit.
B. the price of the Treasury security does not vary materially from the arbitrage-free value.
C. the Treasury puts a stop to the process.
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I used your notes and passed ... highly recommended!
Lauren
Learning Outcome Statements
explain what is meant by arbitrage-free valuation of a fixed-income instrument;
calculate the arbitrage-free value of an option-free, fixed-rate coupon bond;
CFA® 2025 Level II Curriculum, Volume 4, Module 27.