You Are Interested in Hedging a Portfolio of Bonds Against

question 6

Multiple Choice

You are interested in hedging a portfolio of bonds against a rise in interest rates.Which of the following approaches will be most suitable to your goal?

• A)Selling deep ITM vanilla call options and buy deep ITM vanilla put options.
• B)Selling deep OTM vanilla call options and buy deep OTM vanilla put options.
• C)Selling deep ITM cash-or-nothing calls and buy deep OTM cash-or-nothing calls.
• D)None of the above.

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The legally bestowed power an agent has to act on behalf of another person or entity, often defined by a contract or law.

Signed By The Principal

An act where the main party in a transaction or legal document formally endorses it, validating its terms or agreement.

Fiduciary Duty

The legal obligation to act in another party's best interest, often found in relationships involving trust, like between a lawyer and client or shareholder and company director.

Relationship Of Trust

A fiduciary association between parties, where one party places trust and confidence in another who has a duty to act for the former's benefit.