Say an active bond manager believed that bond market yields were going to fall in the near future.In order to achieve higher returns the manager would sell short-term bonds and buy long-term bonds now.

Question

Quizplus · Accepted Answer

By selling short-term bonds and buying long-term bonds now, the manager is positioning their portfolio to benefit from falling yields, as longer-term bonds typically experience larger price increases when yields fall.

Say an Active Bond Manager Believed That Bond Market Yields