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Question
Suppose that a pension fund manager knows that bonds must be liquidated in 40 days to make a $5 million payment to the beneficiaries of the pension fund. If interest rates rise in 40 days, more bonds will have to be liquidated to realize $5 million. The hedger will buy put options thus following ________.A) an unprotected call buying strategy.
B) a protective put buying strategy.
C) a protective put selling strategy.
D) an unprotected put buying strategy.
Answer
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