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You are a bond portfolio manager. You believe that the economy is stronger than government officials have forecast and the Federal Reserve will soon respond
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You are a bond portfolio manager. You believe that the economy is stronger than government officials have forecast and the Federal Reserve will soon respond with an increase in interest rates unanticipated by the market. Should you increase, decrease, or not change the duration of your bond portfolio given your expectation of an interest rate hike? Explain.
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