1. A manager has a 70/30 stock and bond portfolio. To synthetically create a portfolio that is 50 percent stock and 50 percent bonds, the manager should:

A. go short the bond futures is enough.

B. go long the bond futures and short the stock index futures.

C. go long both bond futures and stock index futures.

D. short the bond futures and go long the stock index futures.

2. The writer of a payer swaption has:

A. the right to enter a swap in the future as the floating-rate payer.

B. the right to enter a swap in the future as the fixed-rate payer.

C. an obligation to enter a swap in the future as the floating-rate payer.

D. an obligation to enter a swap in the future as the fixed-rate payer.