Final answer:
The bond portfolio management strategies include modified buy and hold, interest rate anticipation, laddering, credit analysis, horizon analysis, portfolio immunization, dedicated portfolios, and swap analysis.
Step-by-step explanation:
Modified buy and hold: This strategy involves purchasing a bond and holding it until its maturity date, but with a willingness to sell the bond before maturity if market conditions warrant a sale.
Interest rate anticipation: This strategy involves making investment decisions based on expectations about interest rate movements. For example, if an investor expects interest rates to rise, they may choose to invest in shorter-term bonds to minimize the potential for capital loss.
Laddering: This strategy involves purchasing bonds with different maturity dates to create a portfolio that is diversified across different interest rate cycles.
Credit analysis: This strategy involves analyzing the creditworthiness of bond issuers to make informed investment decisions. Investors may use credit ratings and financial ratios to assess the risk of default.
Horizon analysis: This strategy involves matching the maturity of bond holdings to the investor's investment horizon. This can help manage interest rate risk and ensure funds are available when needed.
Portfolio immunization: This strategy involves constructing a bond portfolio to minimize the impact of interest rate fluctuations. It aims to ensure that the portfolio's value remains relatively stable, regardless of changes in interest rates.
Dedicated portfolios: These portfolios are designed to meet specific investment objectives, such as generating income or preserving capital. They are often customized to meet the needs of individual investors or institutional clients.
Swap analysis: This strategy involves analyzing the potential benefits of entering into interest rate swaps to manage interest rate risk or enhance portfolio returns.