Fixed Income Portfolio Management - Rioja

CFA Level III
#1

Question 6

why putable bond explanation is wrong ? please explain barbell preference that is stated here.

#2

Hi shrubaks123,

“Put structures will provide investors with some protection in the event that interest rates rise sharply but not if the issuer has an unexpected credit event.”

I think puttable bond will give investors some protection if the issuer has an unexpected credit event.

Thanks.

#3

Anybody shed some light over the explanation that why barbellers prefer credit securities at front/short end and treasuries at long end ?

What’s the reason for puttable bond explanation ?

#4

let me ask you why wouldn’t you think a put structure provide some protection against an unexpected credit event?

you can find better value in the front end in the credit sector. treasuries you get almost nothing, at least in the long end you earn a couple of percents.

#5

i got the explanation, please explain somebody about barbell strategy’s intention explained here.