Question One. Mike Shannon has a mandate to manage a \$35 million bond portfolio by an investor whose investment objective is to have $47.3 million in seven years. The investor's primary objective is to have $47.3 million in seven vears, but places some value on having more than $47.3 million in seven years. Mr. Shannon's proposed bond portfolio shown below is based on a view that interest rates will decline. Mike Shannon's Proposed Bond Portfolio Mr. Shannon recognizes his portfolio approach is aggressive. To better understand the risk to meeting the investor's objective with his proposed portfolio, Mike has asked you to calculate the highest the threeyear rate can be in seven years so that when Mike liquidates his position the liquidation proceeds are \$47.3 million