Question: How do you get the bonds portfolio active return?
Answer: The difference between Portfolio’s actual return minus the benchmark (against which portfolios is tracked) is known as actual return. Active return = Portfolio’s actual return – Benchmark’s actual return
Question: Which are the types of risk included in the interest rate risk for a bond?
Answer: Interest-rate risk is the risk associated with an adverse/major change in interest rates which includes - Level risk - Yield-curve risk.
Question: How can you measure the level risk?
Answer: To measure the level risk, we can use the duration.
Question: Which is the measure for the yield-curve risk?
Answer: Key rate duration is the most popular measure of yield-curve risk.