8. The liabilities duration of XYZ fund is equal to 15 years. XYZ wants to immunize itself against the volatile interest rate. The CEO thinks that they should buy a 5-year zero coupon bond and perpetual bonds yielding 4%. However, the CFO affirms that they should buy a 4-year zero coupon bond and perpetual bonds yielding 5%. Which of the following statements is TRUE? *

a. According to the CEOs viewpoint, the weight of the zero-coupon bonds must be equal to 52.38% while according to the CFOs viewpoint the weight of the perpetuities must be equal to 47.62%

b. According to the CEOs viewpoint, the weight of the zero-coupon bonds must be equal to 64.71%, while that of the perpetuities must be equal to 35.29%

c. According to the CFOs viewpoint, the weight of the perpetuities must be equal to 64.71%, while according to the CEOs viewpoint their weight must be equal to 52.38%.

d. According to the CEOs viewpoint the weight of the perpetuities must be equal to 47.62%, while according to the CFOs viewpoint their weight must be equal to 64.71%.

e. None of the above

You are provided with the following characteristics for different bonds. Assume that the yield-to-maturity for all bonds is 8%. Bonds Coupon Rate Maturity Alpha & Co. 6.5% paid quarterly Beta Corp 6.5% paid semiannually 3 years Gamma Inc. 8% paid annually 4 years 3 years 1. Rank the given bonds from the lowest MVO to the highest: * O a. Alpha, Beta, Gamma b. Gamma, Beta, Alpha c. Beta, Alpha, Gamma d. Gamma, Alpha Beta OO e. None of the above 2. The durations of Gamma, Beta and Alpha Bonds in years are respectively:* a. 2.86, 2.76, 3.58 Ob 10.97. 5.53.2.78 O c.2.78.5.53.10.97 O d. 3.58,2.76, 2.86 e. None of the above 3. The convexity of bond Gamma is equal to: a. 10.5 b. 9.6 O c.9.3 O d. 14.74 O e None of the above 4. Assume that the YTM decreases by 1%, which of the following statements is TRUE about Gamma's bond? a. Its modified duration is more than the old duration by 3 months and 5 days. b. Its new price is higher than the old price by more than $20 O c. The percentage variation in its price is lower than 2.5% d. All of the above O e. None of the above