If your stock portfolio raises by 5% when the 10-Year treasury market declines 3% what is the sensitivity of your portfolio compared to that of the bond market? Next, in 3 months you expect the FED will drop interest rates by 0.25%, what is your expected portfolio return on that day? (Assume demand curve is normally sloped.)

		a. The sensitivity of my portfolio is 0.6 (a positive relationship between stocks and bonds), so in 3 months time, when the FED announces they will lower rates by 0.25%, my portfolio will drop 0.15% on that day. Provided the sensitivity remains stable.
		b. The sensitivity of my portfolio is 20, so when the FED lowers rates by 3% my portfolio will rise 60%.
		c. My portfolio is not sensitive to the treasury market at all.
		d. The sensitivity of my portfolio is -1.67 (an inverse relationship between stocks and bonds), so in 3 months time, when the FED announces they will lower rates by 0.25%, my portfolio will rise 0.4175% on that day. Provided the sensitivity remains stable.