Your current active view for the fixed-income market over the coming months is that Treasury yields will decline and corporate credit spreads will also decrease. Briefly dis- cuss how you could restructure the existing portfolio to take advantage of this view.

Q#9: [20 Points] A university endowment fund has sought your advice on its fixed-income portfolio strategy. The characteristics of the portfolio's current holdings are listed below: Credit Maturity Coupon Modified Market Value Bond Rating (yrs.) Rate (%) Duration Convexity of Position A U.S. Govt. 3 2.727 9.9 $30,000 A1 10 8 6.404 56.1 30,000 Aa2 5 12 3.704 18.7 30,000 mona Agency 7 10 4.868 32.1 30,000 Aa3 12 0 10.909 128.9 30,000 $150,000