A bond portfolio manager has a $25 million market value bond portfolio with a six-year...
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Accounting
A bond portfolio manager has a $25 million market value bond portfolio with a six-year duration. The manager believes interest rates may increase 50 basis points. Which of the following could be used to help limit his risk?
- I. Sell put options on the bonds.
- II. Buy bond futures contracts.
- III. Buy call options on the bonds.
- IV. Buy put options on the bonds.
Multiple Choice
-
IV only
-
II only
-
I and III only
-
I and IV only
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