At the time of the last referendum, Quebec provincial bonds carried a higher yield than comparable Ontario

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At the time of the last referendum, Quebec provincial bonds carried a higher yield than comparable Ontario bonds because of investors’ uncertainty about the political future of Quebec. Suppose you were an investment manager who thought the market was overplaying these fears. In particular, suppose you thought that yields on Quebec bonds would fall by 50 basis points. Which bonds would you buy or sell? Explain in words.

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Fundamentals of Corporate Finance

ISBN: 978-0071051606

8th Canadian Edition

Authors: Stephen A. Ross, Randolph W. Westerfield

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