In a rising rate environment, which portfolio adjustment is typically prudent?

• A. Increase duration to lock in yields.
• B. Reduce duration to lower interest-rate risk; adjust convexity exposure through hedges or rebalancing; consider short-duration or long convexity positions if appropriate.
• C. Leave duration unchanged and only adjust credit risk.
• D. After rising rates, exit all fixed income positions.

Answer: (B)