Question
Q. An investor wants to earn a minimum return of 3% over the next 5 years. He doesn't want to take any price risk and
Q. An investor wants to earn a minimum return of 3% over the next 5 years. He doesn't want to take any price risk and reinvestment risk.As a portfolio manager, how can you help him to construct a bond portfolio? What would be your profits? (Given you are interested in the following bonds.)
| Ratings | Coupon | Maturity | Yield | Number of payments per year | |
| Bond 1 | AAA | 4.75 | 6 years | 3.50% | 2 |
| Bond 2 | AAA | 3.5 | 8 years | 3.00% | 2 |
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An Introduction To Management Science Quantitative Approaches To Decision Making
Authors: David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey Cam
13th Edition
9781111532246, 1111532222, 1111532249, 978-1111532222
