The investor fears that interest rates might increase in


An investor holds a portfolio of low-grade, long-term corporate bonds. The investor fears that interest rates might increase in the future, and wishes to hedge against this risk (rather than selling the bonds now).

A. Can this risk be hedged using standardized futures contacts? If so, how?

B. Will your hedging strategy in Part A eliminate all risk? Why or why not?

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Financial Management: The investor fears that interest rates might increase in
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