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In: Accounting

Your company asks you to manage a short-term guaranteed investment contract. Your job is to create...

  1. Your company asks you to manage a short-term guaranteed investment contract. Your job is to create a portfolio that has a 4-year duration.

    (a) If you are given the choice of using a 5-year zero coupon bond and a 3-year 8% annual coupon bond with a yield to maturity of 10%, how would you construct your portfolio?

(b) What is the modified duration of that 3-year annual coupon bond in (a)?

(c) If the yield to maturity of that 3-year annual coupon bond decreases to 8.045%, how much percentage change in price would you expect to see using modified duration?

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PLEASE UPVOTE...ITS HELPS ME ....THANK YOU...SOO MUCH....


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