Question
2. We consider a portfolio composed of 60% of bond A and 40% of bond B, whose features are given below. Bond A: Maturity: 2
2. We consider a portfolio composed of 60% of bond A and 40% of bond B, whose features are given below.
Bond A: Maturity: 2 years Coupon: 4% (annual frequency) Yield to maturity: 5% (annual compounding frequency)
Bond B: Maturity: 5 years Coupon: 5% (annual frequency) Yield to maturity: 6% (annual compounding frequency)
1. Compute the YTM of the portfolio.
2. Compare it with the average yield and the dollar duration weighted yield of the portfolio. What is your conclusion?
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Financial Freedom
Authors: Timothy Turner
1st Edition
1801573573, 978-1801573573
