You Are Interested in Hedging a Portfolio of Bonds Against

question 34

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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Definitions:

American Companies

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Technology Pressure

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The influence that society exerts on individuals or organizations to adopt certain behaviors, practices, or norms.