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A Bond Portfolio Manager Notices a Hump in the Yield

question 59

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A bond portfolio manager notices a hump in the yield curve at the 5-year point. How might a bond manager take advantage of this event?


Definitions:

Excise Tax

A tax imposed on specific goods, such as tobacco and alcohol, typically to discourage their consumption or generate revenue.

Tax Revenue

The revenue collected by governments from taxes.

Subsidy

A payment the government makes to either the buyer or the seller, usually on a per-unit basis, when a good or service is purchased or sold.

Selling Price

The amount of money for which a seller offers a product or service to a buyer.

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