Assume that you manage a bond portfolio. The Dollar duration of the portfolio is -6,710,000....
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Assume that you manage a bond portfolio. The Dollar duration of the portfolio is -6,710,000. An instrument is traded with dollar duration equal to -1,342. To make the portfolio duration neutral you need to...
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| Buy 1342 units of the hedging instrument. |
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| Short sell 5000 units of the hedging instrument. |
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| Short sell 1342 units of the hedging instrument. |
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| Buy 5000 units of the hedging instrument.
Please explain why you would choose to short sell instead of buy or vice versa. |
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