Person X is a graduate, who is working as a financial planner at company C. The president and congress involved in the dispute of acrimonious over the financing of debt and budget. The dispute which is not settled at the end of the year and effected the rate of interest. The responsibility of person X is to compute the risk of bond portfolio of client. Person X should explain the probable scenarios for the dispute resolution and compute rate of return for 10 years zero coupon treasury bond for each cases. To discuss: The impact of higher rate of interest on security market line and returns needed on less risk and high risk securities, if risk free rate increases to 7%.

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Chapter 2, Problem 14MC

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Person X is a graduate, who is working as a financial planner at company C. The president and congress involved in the dispute of acrimonious over the financing of debt and budget. The dispute which is not settled at the end of the year and effected the rate of interest.

The responsibility of person X is to compute the risk of bond portfolio of client. Person X should explain the probable scenarios for the dispute resolution and compute rate of return for 10 years zero coupon treasury bond for each cases.

To discuss: The impact of higher rate of interest on security market line and returns needed on less risk and high risk securities, if risk free rate increases to 7%.

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