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CFA Level 2 - Fixed Income
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1/5
According to the expectations hypothesis, if an investor expects short-term interest rates to rise in the future, which strategy would likely maximize their return over a long-term investment horizon?
a.
Invest in a series of short-term bonds and reinvest the proceeds at the prevailing rates
b.
Invest in a combination of short-term and long-term bonds to diversify the portfolio and mitigate interest rate risk
c.
Invest in a long-term bond and hold it until maturity to lock in the current yield
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