A bond investor has $100,000 to invest and has determined 10 years is his maximum term.He puts $10,000 in one-year bonds,$10,000 in two-year bonds,$10,000 in three-year bonds,etc.all the way to $10,000 in ten-year bonds.This is an example of:
A)bond equality
B)bond laddering
C)bond blending
D)bond term management

Question

Quizplus · Accepted Answer

This is an example of bond laddering, where the investor spreads out their investments across different maturities in order to balance risk and return. By investing in bonds with varying maturities, the investor is able to hedge against interest rate risk, benefit from higher yields in longer-term bonds, and maintain some liquidity with shorter-term bonds.

A Bond Investor Has $100,000 to Invest and Has Determined