Answer the following questions regarding bond portfolio strategies:

1. Passive bond management is appropriate for conservative investors who view bonds as fixedincome securities that offer a steady stream of interest income over the life of the obligation and a return of principal at maturity. What are the two broad classes of passive management that are pursued in the fixed- income market? Briefly explain what each of them entails.
2. Some fixed-income investors are interested in earning the capital gains that accrue if they correctly anticipate movements in interest rates. Name and briefly explain two typical active bond management strategies.