Credit Risk Mitigation Strategies

Very Easy Risk Management Applications Credit Risk Management

ABC Investments is assessing its exposure to credit risk in its current fixed-income portfolio. The portfolio consists of various bonds from different issuers, and the investment team is evaluating strategies to mitigate potential losses from defaulting securities.

The team considers three different strategies:

Increase the duration of the bond portfolio.

Diversify the portfolio by including bonds from different sectors.

Increase the weight of high-yield bonds in the portfolio.

Hint

Submitted7.7K

Correct5.2K

% Correct68%