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CFA Level 3
Fixed Income Portfolio Management

Effective Strategy to Reduce Interest Rate Risk in Fixed Income Portfolio

Hard Managing Fi Portfolios Interest Rate Risk

A fixed income portfolio manager is evaluating their bond portfolio's exposure to interest rate risk. The portfolio consists of various securities, each with different durations and credit qualities. Recently, there has been a shift in the economic outlook, leading to speculation that interest rates will rise. The manager needs to decide on an active management strategy to mitigate potential losses from rising interest rates.

Which of the following strategies is most likely to effectively reduce the portfolio's interest rate risk?

Hint

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