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De able and measure the risk of inverse floaters by breaking them down into more basic fixed income securities). Q7. You are standing on February

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De able and measure the risk of inverse floaters by breaking them down into more basic fixed income securities). Q7. You are standing on February 15,1994: (a) What is the total value of the portfolio? (b) Compute the dollar duration of the portfolio. Q8. You are worried about interest rate volatility. You decide to hedge your portfolio with a 10-year zero coupon bond. (a) How much should you go short/long on this bond in order to make it immune to interest rate changes? (b) What is the total value of the portfolio now

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