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Basic Question 4 of 5
Consider a yield curve that is upward sloping. Assume you have a 2-year investment horizon and the yield curve won't change. Which strategy will have the lowest return?
B. buy a 5-year bond and sell it after 2 years.
C. buy a 10-year bond and sell it after 2 years.
A. buy a 2-year bond and hold it to maturity.
B. buy a 5-year bond and sell it after 2 years.
C. buy a 10-year bond and sell it after 2 years.
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Your review questions and global ranking system were so helpful.
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Learning Outcome Statements
describe the assumptions concerning the evolution of spot rates in relation to forward rates implicit in active bond portfolio management;
describe the strategy of rolling down the yield curve;
CFA® 2025 Level II Curriculum, Volume 4, Module 26.