A
To explain: The sales of a large illliquidity bond which is in a large position.
Introduction: Risks are the unenviable which occurs due to the market ups and downs. To hedge risk by using financial futures some actions are performed by the
B
To explain: How the manager will sell the bond to gain until the next year.
Introduction: To evade risk by using financial futures some proceedings are performed by the portfolio manager. The Manager desires to put on the market the bonds but at dissimilar gain.
C
To explain: You want to purchase the bonds at quite attractive prices.
Introduction: Bonds are future investment of the money with a specific return value. You are expecting a yearly plus and want to invest that money on corporative bonds but the prices are varying.
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Check out a sample textbook solution- After recently receiving a bonus, you have decided to add some bonds to your investment portfolio. You have narrowed your choice down to the following bonds (assume semiannual payments): Which bond would you rather own if you expect market rates to fall by 2% across the maturity spectrum? What if rates will rise by 2%? Why?arrow_forwardYou believe that stocks are overvalued so you elect to add bonds to your retirement plan to reduce future potential downside price risk. With cash you've received from the sale of equities, you target two bonds for purchase. What is the fair market value for each of these bonds if the YTM for both is 6.75%? First bond: What is the price of an 8-year 4.95% coupon bond with $1,000 face value paying coupons semiannually? $944.28 $908.15 $890.12 $1,117.72 $875.36arrow_forwardFor an investor who plans to purchase a bond that matures in one year, the primary concern should be Select one: a. Yield to maturity b. Interest rate risk c. Coupon rate risk d. Exchange rate risk Clear my choicearrow_forward
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