Assuming average coupon rates and a normal yield curve, the ladder portfolio generally has ________ reinvestment rate risk and _______ interest rate risk than a barbell portfolio.
A) less, more
B) less, less
C) more, less
D) more, more

Question

Quizplus · Accepted Answer

A ladder portfolio has less reinvestment rate risk because it has a more diversified maturity structure than a barbell portfolio. A ladder portfolio has more interest rate risk because it has a longer average duration than a barbell portfolio.

Assuming Average Coupon Rates and a Normal Yield Curve, the Ladder