Term
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Definition
| Goal is to mirror particular market's overall results. Harder with Bonds then Stocks since Bonds roll over/get called, etc. |
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Term
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Definition
| Synconizing a companies assets and liability durations so that the are protected from interest rate changes |
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Term
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Definition
| Attempting to set up the portfolio to maintain value at a particular target date, regardless of interest rate changes |
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Term
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Definition
| Need to continuously monitor portfolio, since durations change over time |
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Term
| Cashflow Matching and Dedication |
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Definition
| Simply buy bonds indentically matched to the cashflows of liabilities. Not practical |
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Term
| 5 Bond Swaps in Active Management |
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Definition
| 1) Substitution Swap 2) Intermarket Spread Swap 3) Rate Anticipation Swap 4) Pure Yield Swap 5) Tax Swap |
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Term
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Definition
| Replace indentical bond, for lower price |
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Term
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Definition
| Anticipation of narrowing of spreads between different types of bonds - say government and corporate expected to be closer, buy more corp |
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Term
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Definition
| Swap ahead of expected changes in rates |
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Term
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Definition
| Done to Replace low yielding bonds with higher yield, despite risk |
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Term
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Definition
| Used to gain a tax benefit |
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Term
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Definition
| Set a trigger level necessary to reach minimal return. If funds drop below this level, switch to passive management |
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