Assume a Portfolio Manager Created a Short Interest Rate Hedge

question 57

Multiple Choice

Assume a portfolio manager created a short interest rate hedge for his/her portfolio. Given this hedge, the manager is

• A) essentially eliminating both the downside risk and the upside potential.
• B) eliminating the downside risk without hampering the upside potential.
• C) partially diminishing the downside risk without impairing the upside potential.
• D) eliminating the downside risk and increasing the upside potential.

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Definitions:

Lymph Movement

The process whereby lymph circulates throughout the lymphatic system, aiding in the removal of waste and the transportation of lymphocytes.

Lymph Vessels

A network of vessels that carry lymph, a clear fluid containing white blood cells and waste products, throughout the body.

Veins

Blood vessels that carry blood toward the heart, contrasting with arteries, which carry blood away from the heart.

Arterioles

Small branches of arteries leading into capillaries, responsible for regulating blood flow to specific areas of the body by constricting or dilating.