Buying a bond (for example, with fixed-rate coupon payments) and simultaneously selling another (for example, with variable rate interest payments) is an example of:
A) a bond ladder strategy.
B) a bond swap.
C) an interest rate futures transaction.
D) an immunization strategy.

Question

Quizplus · Accepted Answer

A bond swap involves selling one bond and buying another, often to take advantage of different interest rate conditions or to improve the portfolio's yield or risk profile.

Buying a Bond (For Example, with Fixed-Rate Coupon Payments) and Simultaneously