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Active bond trading strategies include trading on forecasted interest rate behavior and bond swaps.
What are the strategies in bond market?
Maximizing the portfolio's total returns is the main objective of the active bond strategy. The active bond portfolio management technique places more of an emphasis on overall returns than immunization or passive management strategies, which both try to reduce risk.
What is bond swaps?
When the proceeds from the sale of one debt instrument are then used to buy another debt instrument, this is known as a bond swap. Bond swaps can be utilized to take advantage of shifting market conditions or to obtain tax benefits (known as a tax swap).
Why is it important that we understand the behavior of interest rates?
People are frequently encouraged to invest and save when interest rates are higher in order to benefit from the increased amount of interest that may be generated. Understanding how shifting interest rates could impact your saving and borrowing behaviors is crucial for both lenders and borrowers.
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