You have your money divided between the following government bonds in the following proportions. 20% in 5 Year bonds at 6% yield 40% in 10 year bonds at 6% yield 40% in 15 year bonds at 6 % yield You expect the yield curve to change such that will increase to 7% at 5 year bonds, remain at 6% for 10 year bonds and fall to 5% for 15 year bonds. Which of the following represents a sensible reallocation of you portfolio based on your expectations? 

A) 60% in 5 year bonds, 20% in 10 year bonds and 20% in 15 year bonds. 

B) 30% in 5 year bonds, 30% in 10 year bonds and 40% in 15 year bonds. 

C) 10% in 5 year bonds, 35% in 10 year bonds and 55% in 15 year bonds 

D) None of the above

Answer rating: 100% (QA)

The best strategy in bond investing is generally to have your money in the bonds that yield the high... View the full answer