Question
Anna Green thinks that the recent Federal Reserve policy is going to push the interest rates up. She is considering keeping only one of the
Anna Green thinks that the recent Federal Reserve policy is going to push the interest rates up. She is considering keeping only one of the three bonds in her portfolio. She knows that bond A has a duration of 5.234, bond B has a duration of 4.867, and bond C has the following characteristics:
Par Value 1,000
Life 5 years
Coupon Rate 5%
Discount rate 14 percent
Which one of the three bonds should she keep? Why? Explain.
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Finance And Financial Markets
Authors: Keith Pilbeam
3rd Edition
023023321X, 978-0230233218
