If interest rate hiked quickly, suppose you are a MBS investor and have to maintain a target range of duration to minimize market risk and match your liability as well, which of the following would you do to achieve the goal?
If interest rate hiked quickly, suppose you are a MBS investor and have to maintain a target range of duration to minimize market risk and match your liability as well, which of the following would you do to achieve the goal?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:If interest rate hiked quickly, suppose
you are a MBS investor and have to
maintain a target range of duration to
minimize market risk and match your
liability as well, which of the following
would you do to achieve the goal?
A. Long US Treasury
B. Long floating rate note
C. interest rate swap by paying fixed
& receiving floating
D. interest rate swap by receiving
fixed & paying floating
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