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Question 12 - Interest rate changes Suppose you expect interest rates to rise. You are not indifferent towards interest rate risk and desire to maximise

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Question 12 - Interest rate changes Suppose you expect interest rates to rise. You are not indifferent towards interest rate risk and desire to maximise expected return. If you hold a portfolio consisting of 50 per cent short-term bonds (less than a year to maturity) and 50 per cent long-term bonds, how might you adjust your portfolio to maximise your profit? Explain carefully

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