Final answer:
The advantages of fixed income active management over equity markets include the bond market's size and complexity, new issue concessions, frequent changes to index constituents, and the presence of noneconomic investors. The correct option is D) All answers are correct, indicating that each listed factor can contribute to the potential benefits of active management in fixed income markets.
Step-by-step explanation:
The question pertains to the advantages of fixed income active management over equity markets. Considering the options provided, all of them present potential advantages:
The size and complexity of the bond market - This can offer more opportunities for active management strategies to exploit inefficiencies.
New issue concessions - New bond issues often come with concessions that can provide additional yield to the investors who know how to identify and access them.
Frequent changes to index constituents - Active managers can take advantage of the lag between a bond's announcement to be added or removed from an index and its actual inclusion or exclusion.
Noneconomic investors - These are investors with objectives other than profit maximization, such as insurance companies or pension funds managing liabilities, which can create price anomalies that active managers can arbitrage.
Thus, the correct option answer in the final answer is D) All answers are correct. These aspects of the bond market can contribute to the potential for active management to add value over passive strategies, particularly in contrast to the more efficiently scrutinized equity markets.