Two zero-coupon bonds to have the target duration

Assignment Help Financial Management
Reference no: EM132068689

You are managing a bond portfolio of $1 million. Your target duration is 10 years, and you can invest in two bonds, a zero-coupon bond with maturity of five years and a zero-coupon bond with maturity of 15 years, each currently yielding 5%.

(1) What are your weights in these two zero-coupon bonds to have the target duration?

(2) How will these factions change next year if the target duration is still ten years?

Reference no: EM132068689

Questions Cloud

Bank operating in fast changing interest rate environment : Bank A is a retail universal bank operating in a fast changing interest rate environment.
Calculate the yield to maturity of this bond : Calculate the yield to maturity of this bond. Calculate the price of this bond if the yield to maturity decreases by 1% with maturity unchanged..
The correlation between the two stocks : Consider that IBM is trading at $144 and Exxon Mobil is trading at $ 88. The correlation between the two stocks is 33%
Best characterized as multi-country-global or hybrid : Is Deere and Company’s international strategy best characterized as a multi-country, global or hybrid? Please explain.
Two zero-coupon bonds to have the target duration : What are your weights in these two zero-coupon bonds to have the target duration?
Change as result of the change in depreciation and sales : By how much will the net income change as a result of the change in depreciation and sales?
Factors affecting the corporate cost of capital estimate : Describe the buildup method for estimating a small business’s cost of equity. What are the factors affecting the corporate cost of capital estimate?
Calculate the predicted price using the modified duration : Calculate the predicted price using the modified duration with convexity rule, and the percentage error of this rule.
Purchase by making single deposit today : Her grandmother would like to fund that purchase by making a single deposit today into an account earning 5.0% per year.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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