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
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
Problem 1PS
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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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