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Series 65 Exam Tutor

Bond Strategies

The Interest Rate Environment


You expect falling interest rates ( Increase Duration)


Sell short bonds with higher nominal yields


Buy long term bonds with lower nominal yields


The rational is that falling rates is good for bond investors and you want to be invested in the bonds that will increase the most in price when rates change.


You expect rising interest rates (Reduce Duration)


Sell long term bonds with lower nominal yields


Buy short bonds with higher nominal yields


The rational is that rising rates is bad for bonds and you want to be invested in the bonds that will decrease the least in price when rates change




Credit Risk and the Economy


You expect the economy to strengthen


Sell Treasuries or something similar and buy corporates


The rational is that corporate bonds will perform better in a good economy than Treasuries



You expect the economy to weaken


Sell Corporates buy Treasuries


The rational is that Treasuries will perform better than corporates in a weak economy

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