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A bond portfolio manager has a $25 million market value bond portfolio with a 19-year duration. The manager believes interest rates may increase 50 basis points. Which of the following could be used to help limit his/her risk? 1, Sell the bonds forward, II. Buy bond futures contracts. III. Buy call options on the bonds. IV. Buy put options on the bonds. Oil and Ill only OIL II and IV only Olonly Oll only OI and IV only

A bond portfolio manager has a $25 million market value bond portfolio with a 19-year duration. The manager believes interest rates may increase 50 basis points. Which of the following could be used to help limit his/her risk? 1, Sell the bonds forward, II. Buy bond futures contracts. III. Buy call options on the bonds. IV. Buy put options on the bonds. Oil and Ill only OIL II and IV only Olonly Oll only OI and IV only

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A bond portfolio manager has a $25 million market value bond portfolio with a 19-year duration. The manager believes interest rates may increase 50 basis points. Which of the following could be used to help limit his/her risk? 1. Sell the bonds forward, II. Buy bond futures contracts. III. Buy call options on the bonds IV. Buy put options on the bonds. O and Ill only OI, III, and IV only I only If only OI and IV only Question 29 A best efforts offering is one where the issue can only be privately placed. O the bid-ask spread is exceptionally high, but the investment banker does their best to sell the issue anyway. the underwriter bears the risk an unsuccessful offering O the investment banker acts as a principal for the issuer. O the investment banker acts only as a distribution agent.
Transcribed Image Text:A bond portfolio manager has a $25 million market value bond portfolio with a 19-year duration. The manager believes interest rates may increase 50 basis points. Which of the following could be used to help limit his/her risk? 1. Sell the bonds forward, II. Buy bond futures contracts. III. Buy call options on the bonds IV. Buy put options on the bonds. O and Ill only OI, III, and IV only I only If only OI and IV only Question 29 A best efforts offering is one where the issue can only be privately placed. O the bid-ask spread is exceptionally high, but the investment banker does their best to sell the issue anyway. the underwriter bears the risk an unsuccessful offering O the investment banker acts as a principal for the issuer. O the investment banker acts only as a distribution agent.
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