Question
A bond portfolio manager has a $25 million market value bond portfolio with a six-year duration. The manager believes interest rates may increase 50 basis
A bond portfolio manager has a $25 million market value bond portfolio with a six-year duration. The manager believes interest rates may increase 50 basis points. Which of the following could be used to help limit his risk?
I. Sell the bonds forward.
II. Buy bond futures contracts.
III. Buy call options on the bonds.
IV. Buy put options on the bonds.
A bond portfolio manager has a $25 million market value bond portfolio with a six-year duration. The manager believes interest rates may increase 50 basis points. Which of the following could be used to help limit his risk? 1. I. Sell the bonds forward. 2. II. Buy bond futures contracts. 3. III. Buy call options on the bonds. 4. IV. Buy put options on the bonds. II and III only I and III only II only I and IV only I onlyStep by Step Solution
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Focus On Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes
2nd Edition
0073530638, 9780073530635
