Chartered Alternative Investment Analyst Association (CAIA) Practice Exam

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When did average quality corporate bonds start being recognized as institutional quality investments in the US?

1950-1960
1960-1970
1970-1980
1950-1980

The correct answer is: 1950-1980

Average quality corporate bonds began to be recognized as institutional quality investments in the United States during the time frame of 1950 to 1980. This period was significant in the evolution of the bond market and the broader acceptance of corporate bonds among institutional investors. During this time, there was increased interest and participation from various institutional investors such as pension funds, insurance companies, and mutual funds, which contributed to the establishment of higher standards for the quality and analysis of corporate bonds. The maturation of the corporate bond market, alongside the development of more sophisticated investment analysis tools and credit rating agencies, played a crucial role in this recognition. These developments not only helped improve the understanding of the risk and return associated with average quality corporate bonds but also elevated their status, making them a viable investment choice for institutions seeking yield and diversification in their investment portfolios.