Which of the following strategies best addresses the liquidity risk of a less frequently traded bond position

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Which of the following strategies best addresses the liquidity risk of a less frequently traded bond position in an active manager’s portfolio?

A. Enter into a receive fixed, pay floating asset swap, unwinding the swap position once the illiquid bond position is sold.

B. Sell single-name CDS protection on the illiquid bond issuer, unwinding the CDS contract when the bond is sold.

C. Allocate the illiquid bond to the buy-and-hold portion of the investment portfolio.

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Fixed Income Analysis

ISBN: 9781119850540

5th Edition

Authors: Barbara S. Petitt

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Question Posted: Nov 08, 2023 01:41 AM

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Which of the following strategies best addresses the liquidity risk of a less frequently traded bond position

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A Enter into a receive fixed pay floating asset swap unwinding the swap po...View the full answer

Fixed Income Analysis

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