Consider the following three-bond portfolio in which all the bonds are option free: Bond Price Par Value Yield Market Value Duration 9% 5-year $122.4565 $5 million 4% $6,122,823 4.142 5% 20-year $113.6777 $2 million 4% $2,273,555 13.087 5.5% 30-year $126.0707 $2 million 4% $2,521,413 16.290 What is the portfolio duration? A. 7.81 B. 8.81 C. 6.80 D. 8.0

Consider the following three-bond portfolio in which all the bonds are option free: Bond Price Par Value Yield Market Value Duration 9% 5-year $122.4565 $5 million 4% $6,122,823 4.142 5% 20-year $113.6777 $2 million 4% $2,273,555 13.087 5.5% 30-year $126.0707 $2 million 4% $2,521,413 16.290 What is the portfolio duration? A. 7.81 B. 8.81 C. 6.80 D. 8.0

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 8FPE: Describe and differentiate between a bonds (a) current yield and (b) yield to maturity. Why are...

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Bond	Price	Par Value	Yield	Market Value	Duration
9% 5-year	$122.4565	$5 million	4%	$6,122,823	4.142
5% 20-year	$113.6777	$2 million	4%	$2,273,555	13.087
5.5% 30-year	$126.0707	$2 million	4%	$2,521,413	16.290