Th e following quote is from Lev Dynkin, Peter Ferket, Jay Hyman, Erik van Leeuwen, and Wei Wu, “Value of Security Selection versus Asset Allocation in Credit Markets,”

Fixed Income Research, Lehman Brothers, March 1999, p. 3:

Most fi xed income investors in the United States have historically remained in a single-currency world. Th eir eff orts to outperform their benchmarks have focused on yield curve placement, sector and quality allocations, and security selection. Th e style of market participants is expressed in the amount of risk assumed along each of these dimensions (as measured by the deviation from their benchmarks), and their research eff orts are directed accordingly.

A . What is meant by “yield curve placement, sector and quality allocations, and security selection”?

B . What is meant by the statement: “Th e style of market participants is expressed in the amount of risk assumed along each of these dimensions (as measured by the deviation from their benchmarks)”?