Elio Karlin i a 35-year old bank executive who has just inherited a large sum of money Having spent several years in the bank's investments department, he's In particular, Eliot intends to use S 1 million of his inheritance to purchase 4 us nd decides app it to his bond portfolio Treasury bonds 1 An 863%, 13-year bond thats priced at $1.094 56 to yield 7 48% 2 A 7 832%, 15-year bond that's priced at S 1026 87 to yield 7 53% 3 A 20-year stripped Treasury (zero coupon) that's priced at$200 05 to yield 8 21% 4 A 24-year, 7 48% bond that's priced at S957 18 to yield 7 88%. Note that these bonds are semiannual compounding bonds a. Find the duration and the modified duration of each bond b. Find the duration of the whole bond portfolio if Elliot puts $250,000 into each of the 4U.S. Treasury bonds .Find the duration of the portfolio i' Eliot puts $360 000 each into bonds 1 and 3 and S140000 each into bonds 2 and 4 d. Which portfolio-bor c-should Eliot select if he thinks rates are bout to head up and he wants to avoid as much price volatilty as possible? Explain From which portfolio does he stand to make more in annual interest income? Which portfolilo would you recommend, and why? be calculated using a spreadsheet, such as Excel. It gives the precise duration measure because it avoids the a. The duration and modified duration can rounding-off errors, which are inevitable with manual calculations Bond 1 13 years, 863%, priced to yield 748% he duration of this bond is years (Round to two decimal places) The modified duration of this bond isyears (Round to two decimal places) Bond 2 15 years. 78325 priced to yield 753% Clck to select your answets) Elliot Karlin is a 35-year-old bank executive who has just inherited a large sum of money Having spent several years in the bank's investments department, he's well aware of the concept of duration and decides to apply it to his bond portfolio In particular, Elliot intends to use $1 million of his inheritance to purchase 4 US Treasury bonds I An863%, 13-year bond that's priced at $1,094 56 to yield 748% 2 A7832%, 15-year bond that's priced at $1026 87 to yield 753% 3 A 20-year stripped Treasury (zero coupon) that's priced at $200 05 to yield 8 21% 4 A 24-year, 7 48% bond thats priced at $957 18 to yield 7 88% Note that these bonds are semiannual compounding bonds a. Find the duration and the modified duration of each bond b. Find the duration of the whole bond portiolio if Eliot puts $250,000 into each of the 4U.S Treasury bonds c. Find the duration of the portiolio if Elliot puts $360,000 each into bonds 1 and 3 and $140,000 each into bonds 2 and 4 d, which portfolio-borc-should Eliot select he thinks rates are about to head up and he wants to avoid as much price volatilly as possible?Explain From which portfolio does he stand to make more in annual interest income? Which portiolio would you recommend, and why? he modified duration of this bond isyears (Round to two decimal places) Bond 2 15years,7832% priced to yield 7 53% he duration of this bond is years (Round to two decimal places The modhed duration ofthis bond years (Round to two decimal places) Bond 3 20years zero coupon priced to yield 8 21% Cack to select your answers Elliot Karlin is a 35-year-old bank executive who has just inherited a large sum of money. Having spent several years in the bank s vestments de well aware of the concept of duration and decides to apply it to his bond portfolio. In particular, Elliot intends to use $1 million of fs beritance to p Treasury bonds 1 An 8 63%, 13-year bond that's priced at $1,094 56 to yield 7 48% 2. A 7 832%, 15-year bond that's priced at S 1026 87 to yield 7 53% 3 A 20-year stripped Treasury (zero coupon) that's priced at S200 05 to yield 8 21% 4 A 24-year, 7 48% bond that's priced at $95718 to yield 7 88% Note that these bonds are semiannual compounding bonds a. Find the duration and the modified duration of each bond b. Find the duration of the whole bond portfolio if Elliot puts $250,000 into each of the 4 U.S. Treasury bonds c. Find the duration of the portfolio i Elot puts $360.000 each into bonds 1 and 3 and $140.000 each into bonds 2 and 4 d. Which portfolio-b or c-should Elliot select if he thinks rates are about to head up and he wants to avoid as much price volatility as possible? Expl which portfolio does he stand to make more in annual interest income? Which portfolio would you recommend, and why? Bond 3 20 years, zero coupon, priced to yield 8 21% The duration of this bond is years (Round to two decimal places.) The modified duration of this bond is years (Round to two decimal places) Bond 4 24 years, 748%, priced to yield 788% The duration of this bond is years (Round to two decimal places) The modified duration of this bond is vears (Round to two decimal olaces l Click to select your answer(s) ctivate Eliot Karlin is a 35-year-old bank executive who has just inherited a large sum of money. Having spent several years in the bank's investmen partment ' well aware of the concept of duration and decides to apply i to his bond portfolio In particular. Elliot intends to use $1 million of his inheritance to purchase 4 US Treasury bonds 1 An 8 63%, 13-year bond tars priced at S 1 094 56 to yield 7 48%, 2 A 7 832% 15-year bond that's priced at $1026 87 to yield 7 53% 3 A 20-year stripped Treasury (zero coupon)that's priced at S200 05 to yield B 21% 4 A 24-year, 7 48% bond that's priced at S957 18 to yield 7 88% Note that these bonds are semiannual compounding bonds a. Find the duration and the modified duration of each bond b. Find the duration of the whole bond portfolio if Elliot puts $250,000 into each of the 4 US. Treasury bonds c. Find the duration of the portfolio iH Elliot puts 5360,000 each into bonds 1 and 3 and $140,000 each into bonds 2 and 4 d. Which portolio--b or c-should Elliot select if he thinks rates are about to head up and he wants to avoid as much price volatility as possible? Explain. From which portlolio does he stand to make more in annual interest income? Which portfolio would you recommend and why? b. Find the duration of the whole bond portolio it Eliot puts $250,000 into each of the 4US Treasury bonds The duration of this portolo in years (Round to two decimal places) e. Find the duration of the portfolio it Elliot The duration of this portolo is years (Round to two decimal places) d. Which portolio the puts $360 000 each into bonds 1 and 3 and $140,000 euch into bonds 2 and 4 portfolio in part b or the portolio in part cmshould Eot select it he thinkn rates are about to head up and he wants to avoid as much price volatility as possible? (Choose the best answer below) Click to select your answerts) Activate Window Elliot Karlin is a 35-year old bank executive who has just inherited a large sum of money Having spent several years in the banks investnents deparment ailance to purchase well aware of the concept of duration and decides to apply it to his bond portfolio. In particular. Elliot intends to use $1 million of his inh Treasury bonds 1 An 8 63%, 13-year bond that's priced at S 1,094 56 to yield 7 48% 2 A 7 8329, 15-year bond thirs priced at $1026 87 to yield 7 53% 3 A 20-year stripped Treasury (zero coupon) thars priced at S200 05 to yield 8 21% 4 A 24-year, 7 48% bond that's priced at S957 18 to yield 7 88% Note that these bonds are semiannual compounding bonds us a. Find the duration and the modified duration of each bond b. Find the duration of the whole bond portfolio if Elliot puts $250,000 into each of the 4 U.S Treasury bonds c. Find the duration of the portfolio if EWiot puts $360,000 each into bonds 1 and 3 and $140,000 each into bonds 2 and 4 d. Which portfollio-b or c-should Eliot select if he thinks rates are about to head up and he wants to avoid as much price volatility as possible? Explain. From which portlolio does he stand to make more in annual interest income? Which portfolio would you recommend, and why? A. He should invest in the portfolio in part b The portfolio in part c has a higher duration than the portfoli invest in the portfollio in part b, because it would be less price volatile than the other portfolio in part b if rates are about to rise, then it is safer to O B. He should invest in either portfoltio The portolio in part c has a higher duration than the portolilo part b ifrates are about to rise, then it is equally sale to invest in either portfolio, because both portfolios would be equally price volatile He should i invest in the portfoio in part b. because it would be more price volatile than the other portfolio C est in the portfolio in part c Th e portfolio in part c has a higher durati n than the portfolio in part b "ratesare about to rise then it is riskier to O D. He should invest in the portfoio in part c The portfolio in part b has a higher duration than the portfolio in part c If rates are about to rise, then ia is safer to invest in the portfolio in part c. because it would be less price volatile than the other portfolo Cick to setect your answer(s)