SIE (Securities Industry Essentials) Practice Exam

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Which of the following investments are generally traded according to their average life rather than their stated maturity dates?

Asset-backed securities
Government bonds
Corporate bonds
Municipal bonds

The correct answer is: Asset-backed securities

Asset-backed securities are generally traded according to their average life rather than their stated maturity dates. This is because the underlying assets in an asset-backed security may have different expected payment schedules, making the stated maturity date less relevant. Government, corporate, and municipal bonds, on the other hand, are typically traded based on their stated maturity dates since they have fixed payment schedules and maturity dates. Though the average life of these bonds may be taken into consideration by investors, it is not the primary factor in determining their trade value.