Bond portfolio has a target duration

Assignment Help Financial Management
Reference no: EM13911238

The manager of a $30 million bond portfolio has a target duration of 13 years for a portfolio with a current duration of 18 years. The manager can add zero coupon bonds with 15 years to maturity, perpetuities with a 15% YTM, or both to the portfolio to reach the target duration. What $ amount should be invested in each asset?

Reference no: EM13911238

Questions Cloud

Describe the features and capabilities of your ideal ess : Imagine that you are the vice president of manufacturing for a Fortune 1000 manufacturing company. Describe the features and capabilities of your ideal ESS.
What is the net present value of this decision : A manufacturer of video games develops a new game over two years. This costs $850,000 per year with one payment made immediately and the other at the end of two years. When the game is released, it is expected to make $1.2 million per year for three ..
Four taxes as applied to the employees gross earning : BMX Company has one employee. FICA social security taxes are 6.2% of the first 117,000 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and four taxes as applied to the employee’s gross earning fo..
Who should decide what is good and what is bad : Does a firm have the right to create wants and try to persuade consumers to buy goods and services they didn't know about earlier?
Bond portfolio has a target duration : The manager of a $30 million bond portfolio has a target duration of 13 years for a portfolio with a current duration of 18 years. The manager can add zero coupon bonds with 15 years to maturity, perpetuities with a 15% YTM, or both to the portfolio ..
Considering investing in corporate bond : You are considering investing in a corporate bond with the following parameters: 15 years to maturity, 12% coupon paid annually, 10% YTM, and a $1,000 par value. What is the yield value of a 32nd of this bond?
Describe the features you would include in your new gss : Describe the features you would include in your new GSS software.
Estimate that still makes the decision to mine worthwhile : A mining company will spend $28 million in order to exploit a low-grade placer deposit of gold ore. They estimate the deposit will produce profits of $6 million per year for six years. They calculate the net present value (NPV) using an estimated cos..
How is decision making in a group environment different : How is decision making in a group environment different from individual decision making, and why are information systems that assist in the group environment different? What are the advantages and disadvantages of making decisions as a group?

Reviews

Write a Review

Financial Management Questions & Answers

  Evaluating lump sums and annuities

Crissie just won the lottery, and she must choose between three award options. She can elect to receive a lump sum today of $60 million, to receive 10 end-of-year payments of $9.3 million, or 30 end-of-year payments of $5.3 million. If she expects to..

  Earnings per share for next year assuming the firm raises

As the Financial vice president for Bear Enterprises, you have the following information: Expected net income after tax next year before new financing : $60,000,000. Sinking Fund payments due next year on existing debt: $20,000,000. Calculate Bear's ..

  Maturity risk premium is required on TIPs

Suppose the rate of return on a 10-year T-bond is currently 5.00% and that on a 10-year Treasury Inflation Protected Security (TIP) is 2.10%. Suppose further that the maturity risk premium on a 10-year T-bond is 0.9%, that no maturity risk premium is..

  Estimate value of asset expected to provide cash inflows

Laura Drake wishes to estimate the value of an asset expected to provide cash inflows of $3000 per year at the end of years 1 through 4 and $15000 at the end of year 5. Her research indicates that she must earn 10% on low risk assets, 15% on average ..

  Assume semi-annual compounding and coupon payments

You can buy or sell a 6% $1000 par U.S. Treasury Note that matures in exactly 4 years (meaning it pays (.06/2)*1000 coupon payments every 6 months starting 6 months from now through maturity, and repays principal on maturity), with a current yield to..

  What would be the additional funds needed

Broussard Skateboard's sales are expected to increase by 15% from $8.6 million in 2013 to $9.89 million in 2014. Its assets totalled $6 million at the end of 2013. Broussard is already at full capacity, so its assets must grow at the same rate as pro..

  Computing tax liabilityhardwaresoftware setup required

computing tax liabilityhardwaresoftware setup required financial calculatorproblem description jonathan a single male

  Consider the concepts of break-even and profit-loss analysis

Consider the concepts of break-even and profit-loss analysis. Define fixed and variable costs. Now provide real life examples as to each of the costs.

  Example of how taking compensation personally

Explain with examples the “total returns” people receive from work. Compensation for many people is an inherently personal and emotional issue. Express your opinion and give an example of how “taking compensation personally,” can play-out on the job.

  How much more will pay over the life of the loan

Siena Normann is buying her first new car. The purchase price is $22,350 and she’ll put $2,350 down. She will finance the car over five years at 7.25%. Her twin sister, Reese, is buying the same car, but because she has a higher credit score, her rat..

  Annual sales of an energy saving device

It is estimated that the annual sales of an energy saving device will be 25,000 the first year and increase by 10,000 per year until 55,000 units are sold during the fourth year. In the fifth year and each year thereafter the sales will decrease by 5..

  Multinational operation for reason of regulatory advantage

A bank may establish a multinational operation for the reason of regulatory advantage. Banks follow their multinational customers abroad to prevent the erosion of their clientele to foreign banks seeking to service the multinational's foreign subsidi..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd