The Excel file Portfolio Bond Immunization Data contains information about three bonds. Use this data to: Yield to maturity (Expected/Current) 9% Number of Years to Future Liability 9.00 Future Liability $7,500 Bond 1 Bond 2 Bond 3 Coupon rate 6.00% 7.000% 8.00% Maturity 12 18 24 Face value 1,000 1,000 1,000 Compute the amount to be invested to meet the future liability noted in the data. This future liability is due in 9 years. Find a combination of Bond 1 and Bond 2 having a target duration of 9 years. Find a combination of Bond 1 and Bond 3 having a target duration of 9 years. Perform an analysis using a data table and an accompanying graph to determine which portfolio would be preferred to attempt to immunize this obligation. Construct a data table by varying the yield to maturity that shows the value of each portfolio at the end of 9 years. Based on your data table, construct a graph that demonstrates the performance of these two portfolios. Explain which portfolio you prefer to use to attempt to immunize this obligation which is due in 9 years. Analyze each portfolio’s performance in attempting to achieve immunization. Please show work in excel and functions/equations used.
The Excel file Portfolio Bond Immunization Data contains information about three bonds. Use this data to: Yield to maturity (Expected/Current) 9% Number of Years to Future Liability 9.00 Future Liability $7,500 Bond 1 Bond 2 Bond 3 Coupon rate 6.00% 7.000% 8.00% Maturity 12 18 24 Face value 1,000 1,000 1,000 Compute the amount to be invested to meet the future liability noted in the data. This future liability is due in 9 years. Find a combination of Bond 1 and Bond 2 having a target duration of 9 years. Find a combination of Bond 1 and Bond 3 having a target duration of 9 years. Perform an analysis using a data table and an accompanying graph to determine which portfolio would be preferred to attempt to immunize this obligation. Construct a data table by varying the yield to maturity that shows the value of each portfolio at the end of 9 years. Based on your data table, construct a graph that demonstrates the performance of these two portfolios. Explain which portfolio you prefer to use to attempt to immunize this obligation which is due in 9 years. Analyze each portfolio’s performance in attempting to achieve immunization. Please show work in excel and functions/equations used.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
100%
The Excel file Portfolio Bond Immunization Data contains information about three bonds. Use this data to:
| Yield to maturity (Expected/Current) | 9% | ||
| Number of Years to Future Liability | 9.00 | ||
| Future Liability | $7,500 | ||
| Bond 1 | Bond 2 | Bond 3 | |
| Coupon rate | 6.00% | 7.000% | 8.00% |
| Maturity | 12 | 18 | 24 |
| Face value | 1,000 | 1,000 | 1,000 |
-
- Compute the amount to be invested to meet the future liability noted in the data. This future liability is due in 9 years.
- Find a combination of Bond 1 and Bond 2 having a target duration of 9 years.
- Find a combination of Bond 1 and Bond 3 having a target duration of 9 years.
- Perform an analysis using a data table and an accompanying graph to determine which portfolio would be preferred to attempt to immunize this obligation.
- Construct a data table by varying the yield to maturity that shows the value of each portfolio at the end of 9 years.
- Based on your data table, construct a graph that demonstrates the performance of these two portfolios.
- Explain which portfolio you prefer to use to attempt to immunize this obligation which is due in 9 years.
- Analyze each portfolio’s performance in attempting to achieve immunization.
Please show work in excel and functions/equations used.
Expert Solution
Trending now
This is a popular solution!
Step by step
Solved in 9 steps with 7 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education