Type of Bond GO190001 MO190002 Characteristics of Bonds An 8.5%, 4-year bond with a par value of RM1,000 and yield at 7.47%. An 8.5%, 4-year bond with a par value of RM1,000 and yield at 8.57%.
Type of Bond GO190001 MO190002 Characteristics of Bonds An 8.5%, 4-year bond with a par value of RM1,000 and yield at 7.47%. An 8.5%, 4-year bond with a par value of RM1,000 and yield at 8.57%.
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
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Question
Meroy Karthik is a bank executive who has just inherited a large sum of money. Having spent several years in the bank’s investments department, he is well aware of the concept of duration - convexity and decides to apply it to his bond portfolio.
In particular, Meroy intends to use RM1 millions of his inheritance to purchase two Malaysian Treasury Bonds:
- Prepare the duration and the modified duration table of each bond.
- Find the duration of the portfolio if Meroy allocates 70 percent into Bonds GO190001 and 30 percent into Bond MO190002.
Transcribed Image Text:Type of Bond
GO190001
MO190002
Characteristics of Bonds
An 8.5%, 4-year bond with a par value of RM1,000 and yield at
7.47%.
An 8.5%, 4-year bond with a par value of RM1,000 and yield at
8.57%.
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