Reading 31: Fixed-Income Portfolio Management—Part II- L management, interest, returns, called, excess

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LOS g: Evaluate the sources of excess return for an international bond portfolio.

Q1. One way that international bond portfolio managers attempt to enhance portfolio returns is to correctly anticipate interest rate and yield curve changes. This strategy is called:

A)   duration management.

B)   sector selection.

C)   bond market selection.

wzaina

 

 

LOS g: Evaluate the sources of excess return for an international bond portfolio. fficeffice" />

Q1. One way that international bond portfolio managers attempt to enhance portfolio returns is to correctly anticipate interest rate and yield curve changes. This strategy is called:

A)   duration management.

B)   sector selection.

C)   bond market selection.

Correct answer is A)

With duration management, bond portfolio managers are able to increase returns by correctly forecasting interest rate shifts and changes in the shape of the yield curve. By correctly estimating these changes, the bond manager can capitalize on the inverse relationship between interest rate changes and the market value of bond issues.

 

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