Assume that an investor comes to you looking for advice. She has $200,000 to invest and wants to put it all into bonds.
a. If she considers herself a fairly aggressive investor who is willing to take the risks necessary to generate the big returns, what kind of investment strategy (or strategies) would you suggest? Be specific.
b. What kind of investment strategies would you recommend if your client were a very conservative investor who could not tolerate market losses?
c. What kind of investor do you think is most likely to use
1. an immunized bond portfolio?
2. a yield pickup swap?
3. a bond ladder?
4. a long-term zero-coupon bond when interest rates fall?