A manager following an interest rate anticipation strategy would shorten portfolio duration if interest rates were expected to increase.

Question

Quizplus · Accepted Answer

Shortening portfolio duration is a common strategy for mitigating the negative effects of rising interest rates, as it reduces the sensitivity of the portfolio to changes in rates. Therefore, a manager following an interest rate anticipation strategy would likely shorten portfolio duration if they expected interest rates to increase.

A Manager Following an Interest Rate Anticipation Strategy Would Shorten