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1. You plan to go to graduate school in 4 years. you estimate the cost of your graduation program to be 10,000. you are thinking of investing a 5 year zero coupon bond and a 3 year 8% coupon bond with a yield to maturity of 10% what proportion of your portfolio should you invest in each bond to immunize this portfolio?

67% 0 coupon, 33% in coupon bond

55% 0 coupon, 45% in coupon bond

50% 0 coupon, 50% in coupon

78% 0 coupon, 12 % in coupon

2. A bond pays annual interest. it's coupon rate is 7%. it's value to maturity is 1000. it matures in 3 years. it's yields to maturity is presently 8%. what is the duration of toys bond?

2.80, 5.20, 10.12, 3.40

Financial Management, Finance

  • Category:- Financial Management
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