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Receiving 5% on one US Government Bond and paying 2.5% on another US Government Bond with the same maturity is an obvious winner, but many hedge funds went bust in 2008 because they were unable to hold their trades to fruition. I don't know this market so I can't explain what happened to this trade back then. But having done many, many equity pairs trade ...


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When the bust came in 2008, hedge funds were force to settle out liquid positions (such as treasury bonds) in order to raise cash in order to meet margin calls on their illiquid positions. These hedge funds would have been sitting on large positions in collaterallized debt obligations (specifically mortgage backed securities) for which there was suddenly no ...


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From Wikipedia: A revenue bond is a special type of municipal bond distinguished by its guarantee of repayment solely from revenues generated by a specified revenue-generating entity associated with the purpose of the bonds, rather than from a tax. Unlike general obligation bonds, only the revenues specified in the legal contract between the bond holder ...


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