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Investors: short-term rates and matured bonds

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What should investors do when rates are increasing short-term and matured bonds?

When rates are falling, long-term bonds will have capital gains from market price increases, so what would be a defensive strategy?

While many investors may devise low risk strategies and strategies to mitigate risks, upheavals can catch even the most savvy flatfooted. Is a balanced portfolio is the answer to managing risks?

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Solution Summary

This solution is comprised of a detailed explanation of financial concepts with regards to bond valuation. It includes what investors should do when rates are increasing short-term, when rates are falling, defensive strategies as well as strategies to mitigate risks. The solution has a word count of 206.

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What should investors do when rates are increasing short-term and matured bonds?
In this situation investors should buy the bonds because the price of the bond would be less than its par value and at the time of maturity the investor would get the par value amount. By doing this the investor will get a ...

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  • MBA, Indian Institute of Finance
  • Bsc, Madras University
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