Question
Suppose that the yield curve is flat at 3%. You want to create a bond portfolio that has a duration of 5 years by investing
Suppose that the yield curve is flat at 3%. You want to create a bond portfolio that has a duration of 5 years by investing in the following two bonds:
Bond A is a three-year bond with a coupon rate of 5%
Bond B is a ten-year bond with a coupon rate of 3%
The coupons are paid, and the rates compounded, annually. What fraction of your portfolio should be invested in bond A?
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New Venture Creation A Framework For Entrepreneurial Start-ups
Authors: Paul Burns
2nd Edition
1352000504, 978-1352000504
