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5. Given a portfolio of bonds1 explain how you ean hedge its risk by taking positions in additional bonds? (hint: how to reduce the sensitivity of

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5. Given a portfolio of bonds1 explain how you ean hedge its risk by takingpositions in additional bonds? (hint: how to reduce the sensitivity of thebond prices to the change of the interest rates?) What is the limitation ofthe hedging strategy? Justify hos:r you measure the sensitivity.
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