YAhmed

thanks a lot bchad! so i understand the swap part. you're saying if we have one bond in the portfolio that is paying a fixed rate. and then you hedge with a receive floating rate and pay fixed rate swap and your portfolio's duration will fall.

but im a little confused about the acquiring a negative duration part. so if im receiving floating rates, then i enter into a pay floating and receive fixed swap? but doesnt that increase the duration then? and how would selling a bond affect the duration then? is it because now the duration has increased because you're paying fixed for the bond?

sorry if the qs are too basic, appreciate the help!