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 use controlling position to adjust the dollar duration 
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In volume 3 of CFAI readings, page 341, “we could use bond#2 as our controlling position” because this security has the shortest duration. Since the rebalancing ratio is calculated to be more than 1(111945/82579, new numbers given in errata), I thought that buying bond 1(longest duration) as our controlling position. Also referring to Schweser 3 P28. Pls correct me if I am wrong.


09 Feb 2013
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Still confusing, in order to raise the dollar duration, buy longest duration bond or sell shortest duration bond or either way? ????


09 Feb 2013
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ggb Wrote:
——————————————————-
> Still confusing, in order to raise the dollar
> duration, buy longest duration bond or sell
> shortest duration bond or either way? ????
Yes, that is right.


09 Feb 2013
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Actually short duration securities are preferable to be used as a controlling position because of their liquidity.


09 Feb 2013
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does anyone know how exactly this works?
Meaning, how do I determine how many bonds to buy or sell. When it’s across the portfolio, it’s easier. How about when I choose to buy or sell a particular bond?


09 Feb 2013
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buying the bond with the longest duration will require the lowest dollar outlay to increase dollar duration to the desired amount.
But you can purchase any bond in the portfolio to raise the dollar duration to the desired level.
In this case, they choose the smallest duration bond by the looks of it.


09 Feb 2013
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ggb, as striker said - you can do whatever works, but liquidity and dollar outlays can guide your choice. I think.


09 Feb 2013
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Hi there! Nice stuff, do keep me posted when you post again something like this! NFTS - Nepotism at it's worse


03 Sep 2018
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