What the best strategy for jamesco may be to

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Problem 1: You work at Jamesco Capital and want to go long a 10-year Naranja Cement US dollar-denominated bond yielding 10% in US Dollars, while a comparable US dollar-denominated Naranja government bond yields 8%. 10-year US Treasury bonds yield 3.5%. You are worried that over the next six months US interest rates may rise, but you are not concerned that credit spreads for Naranja Cement or the Naranja government bond will fluctuate much even if US interest rates rise. The best strategy for Jamesco may be to:

A. Short the US Treasury bond
B. Sell the Naranja Cement bond
C. Buy the US Treasury bond
D. Short the Naranja government bond

Reference no: EM132948927

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