assume that you manage a bond portfolio. the dollar duration of the portfolio is -8,574,000. an instrument is traded with dollar duration equal to -810. to make the portfolio duration neutral you need to trade this many units of the hedging instrument. answer approximate to the closest integer. use the negative sign for short sell (example: -2550) and just the integer for buy (example: 2550).

The entire dollar length of the portfolio has to be zero in order to be duration neutral. If you purchase N units of the hedged item, the following conditions must be met for the investment to be duration neutral:

-8,574,000 + N * (-810) = 0

--8,574,000 = 810N

N = -10,585

According to the definition of a portfolio, it is a mixture of different assets that investors own. The aforementioned group of capital instruments could also include valuable items like equities, funds, derivatives, cash accounts, bonds, etc. People invest their money in these assets in order to make money while preserving the initial ownership of an asset or capital.

Depending upon the level of investment knowledge, people can either manage their portfolios alone or engage the services of qualified financial advisors. Diversification is indeed a key idea for portfolio management, as according to specialists in finance.

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