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A new client is a senior manager at a multi-national company. He is hiring you to manage his assets until he retires in 7-8 years.
A new client is a senior manager at a multi-national company. He is hiring you to manage his assets until he retires in 7-8 years. You and the client agree his primary investment objective is preserving purchasing power while limiting volatility, so default risk and interest rate risk need to be carefully managed. The client is willing to take some credit risk in pursuit of modest capital gains, but he expects you to diversify as much as possible and track the Barclay's Aggregate Bond index fairly closely. His salary is generous, so tax-advantaged securities are preferred. International securities are allowed if the credit rating is investment grade.As time has passed since your initial economic forecast, the economy has started slowing down and you've become concerned about a significant decline in intermediate-term interest rates in the next few months. Corporate profits have also deteriorated and you believe it is a good time to reduce credit exposure to your portfolio. Indicate below how each type of derivative could be used to protect the portfolio against interest rate risk while taking advantage of the profit opportunity of corporate bond spreads widening. Group of answer choices Treasury futures [ Choose ] SOFR futures [
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