QUESTION $5$

Suppose you are managing a portfolio of liability and the predicted the bond yield will slightly increase by $0\mathrm{.}1\%$ per year for the coming $10$ years. Which trading strategy below v provide you the best outcome?

Issue short$-$term bonds and buy long$-$term futures.

Buy$-$back long$-$term bonds or long$-$term futures.

Buy$-$back short$-$term bonds and sell long$-$term futures.

Dispose long$-$term bonds and buy short$-$term bonds.