Question
Consider following two bonds: Maturity Coupon YTM Bond 1 4 years 6 5% Bond 2 8 years 7% 5% Coupon frequency and compounding frequency are
Consider following two bonds:
Maturity Coupon YTM
Bond 1 4 years 6 5%
Bond 2 8 years 7% 5%
Coupon frequency and compounding frequency are assumed to be annual.
What should be the weight of Bond1 and Bond2 if your investment horizon is six years and you want to be hedged against small changes in interest rates?
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Financial Management Principles And Applications
Authors: J William Petty, Sheridan Titman, Arthur J Keown, John D Martin, Peter Martin, Michael Burrow, Hoa Nguyen
6th Edition
1442539178, 9781442539174
