Suppose That a Pension Fund Manager Knows That Bonds Must

question 13

Multiple Choice

Suppose that a pension fund manager knows that bonds must be liquidated in 40 days to make a $5 million payment to the beneficiaries of the pension fund. If interest rates rise in 40 days, more bonds will have to be liquidated to realize $5 million. The hedger will buy put options thus following ________.

• A) an unprotected call buying strategy.
• B) a protective put buying strategy.
• C) a protective put selling strategy.
• D) an unprotected put buying strategy.

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Definitions:

Interdependent Self

A concept emphasizing the relational aspect of self-identity, where an individual's sense of self is closely linked to their relationships and community.

Declarative Self

An individual’s (conscious) opinions about his or her own personality traits and other relevant attributes.

Procedural Self

Patterns of behavior that are characteristic of an individual.

Declarative Self

The aspect of an individual's self-concept that consists of factual information about the self, such as traits, preferences, and experiences.