Academic MBA Question:
Question: Explain the process (in terms of Risk/ Returns/ Ratings etc.) to select bonds in both Rising and declining interest rates scenarios. Select one bond each from the below bonds with long term and short term maturities (eg 10 years as long term bond and 1-3 years as short term bond) and evaluate their risk/ return parameters such as Maturity, YTM etc.
Suggest which of these will outperform/ underperform in current interest rate scenarios. (Assume interest are being paid annually)
Academic Assignment Answer:
