Question

Describe two strategies of passive bond management and two strategies of active bond management.?

Answer 1

two strategies of passive bond management are

1. Indexing bond strategy - In this type of bond strategy, Bonds are tied to match the return of an index. It is just managing bonds in proposition of a bond index.

2.Bond laddering strategy - These type of strategy refers to dividing total investment in bonds in equal proportions and investment of those proportion over different time periods.

two strategies of Active bond management

1.Risk management- one of the active strategies is risk management which focuses over managing risk of bonds in changing environment.

2. Bond swapping - It cam be done to hedge the yield of bonds by swapping it with opposite yield. Like swapping fixed with floating.