Anticipation swaps as bond portfolio management strategy

Assignment Help Financial Management

Reference no: EM131903255

a) Discuss rate anticipation swaps as a bond portfolio management strategy.

b) You manage a portfolio for Ms. Greenspan, who has instructed you to be sure her portfolio has a value of at least $350,000 at the end of six years. The current value of Ms. Greenspan's portfolio is $250,000. You can invest the money at a current interest rate of 8%. You have decided to use a contingent immunization strategy.

i) What amount would need to be invested today to achieve the goal, given the current interest rate?

ii) Suppose that four years have passed and the interest rate is 9%. What is the trigger point for Angel's portfolio at this time? (That is, how low can the value of the portfolio be before you will be forced to immunize to be assured of achieving the minimum acceptable return?

iii) If the portfolio's value after 4 years is $291,437 what should you do?

c) In an increasingly globalized investment environment, comparability problems become even greater. Discuss some of the problems for the investor who wishes to have an internationally diversified portfolio.

Reference no: EM131903255

Questions Cloud

What was the idea surrounding the containment policy : 1. What was the idea surrounding the containment policy? Who were the major players, and was this policy successful?

What would be total return of the bond in percentage : What would be the total return of the bond in dollars? What would be the total return of the bond in percentage?

Identify the components that used in determining goodwill : Beta Corporation acquired 100 percent of the voting shares of Yang Inc. by issuing 10,000 new shares of $10 par value common stock with a $40 market value.

What is the opportunity cost of your mba education : What is the opportunity cost of your MBA education? How does the opportunity cost to you can benefit from a generous federally sponsored tuition grant?

Anticipation swaps as bond portfolio management strategy : Discuss rate anticipation swaps as a bond portfolio management strategy.

Principle legacies of world war one propaganda : According to historian David Welch, what did propagandists seek to accomplish through the use of "atrocity propaganda"?

How a was the enlightenment global in its inspiration : How a was the Enlightenment global in its inspiration, as well as in its effects? Why were Asian influences more influential in the West

How do you find the area : What does d in problem represent and Find the speed corresponding to a maximum allowable Reynolds number

Great composers and color analysis : "Great Composers and Color Analysis" Please respond to one (1) of the following, using sources under the Explore heading as the basis of your response:

User Account

All Pages