We know if Fed raises interest rate, it will only affect the short end yield curve. When we calcuate the hedging interest rate risk question, should we assume Fed will make the whole yield curve parallel shift? Thanks.
Kaplan example (R23, p73)
PM concerned about the possibility that the Fed may increase rates 25 basis points. The manager is interested in limiting her exposure to $1 million. Should the manager hedge, and if so, should she take a long or short position in futures contracts?