Select the most accurate match between the secondary bond trading strategy and its description…
A. Credit Defense Trade: Using this strategy, bond traders are looking to protect against worsening conditions such as a downturn in the economy or deteriorating business conditions for given issuer(s) in order to protect against bond price drops while increasing yields when switching to different bonds.
B. Sector-Rotation Trades: Using this strategy, bond traders are looking to take advantage of market changes they are forecasting by buying into bond market sectors that will out-perform the overall bond market and/or move away from sectors they expect to under-perform.
C. Curve Adjustment Trade: Using this strategy, bond traders are looking to increase their portfolio’s yield by switching to bonds that have higher yields within the same maturity band although they may have lower credit quality.