Fixed Income (Bond Market) Interview Preparation

Question: What is tracking error risk for a bond portfolio?
Answer: Tracking error risk is the standard deviation of the active return of a bond portfolio.


Question: What is the use of Backward-looking tracking error for bond portfolios?
Answer: Backward-looking tracking error is used to assess a portfolio’s performance relative to a benchmark.


Question: What is the Forward-looking tracking error for a bond portfolio?
Answer: Forward-looking tracking error for a bond portfolio is used to predict future performance relative to a benchmark.


Question: What is the use of bond market indexes?
Answer: Investors and portfolio managers recently now rely on bond indexes as benchmarks for –
- Performance: Measuring performance
- Fee based portfolio’s: In the case managing portfolios which are performance-fee based, can be used to determining compensation of portfolio managers.

Related Questions

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Question: What is the difference between term-to-maturity and maturity of a bond?

Question: Why maturity of a bond is so crucial?

Question: How does the yield related between long-term and short-term bond?

Question: Is it possible that bond’s maturity can be changed, once bond is issued?

Question: What do you mean by term bonds?

Question: How does the corporate bonds maturity can change or updated?

Question: Can Municipal bonds or U.S. government can have call privileges?

Question: What are the sinking fund provisions in case of Fixed Income or bond market?