A bond investor has $100,000 and has determined 5 years is his maximum term. He puts $20,000 in one-year bonds, $20,000 in two-year bonds, etc. up to $20,000 in five-year bonds. This is an example of:
A) a barbell strategy.
B) a laddering strategy.
C) an immunization strategy.
D) a term management strategy.

Question

Quizplus · Accepted Answer

This is a laddering strategy, where the investor staggers the maturities of the bonds over different time periods to manage interest rate risk and provide liquidity.

A Bond Investor Has $100,000 and Has Determined 5 Years