Question

A pension-debt fund with a 7 year liability horizon invests in a mix of 4-year and 10-year bonds, leading to overall portfolio duration of 8 years. What should the fund manager do to align with liabilities?

A Buy more 10-year bonds
B Sell 10-year and buy 4-year bonds
C Buy interest rate futures
D Use interest rate swaps to reduce duration
E Do nothing
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