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7. You apect interest rates to decline over the next six months. a. Given your interest rate outlook, state what kinds of bonds you want
7. You apect interest rates to decline over the next six months. a. Given your interest rate outlook, state what kinds of bonds you want in your portfolio in terms of duration, and explain your reasoning for this choice. b. You must make a choice between the following three sets of noncallable bonds. For cach set, select the bond that would be best for your portfolio, given your interest rate outlook and the consequent strategy set forth in Part a. In cach case, briefly dis- cuss why you selected the bond. Maturity Coupon Yield to Maturity Set 1: Bond A 15 years 10% 10% Bond B 15 years 6% 8% Set 2: Bond C 15 years 6% 10% Bond D 10 years 8% 10% Set 3: Bond E 12% 12% Bond F 12% 8% 12 years 15 years
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