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Suppose you are a private wealth manager. You have a client that has asked you to invest some money for them ($1,000,000) for exactly 10
Suppose you are a private wealth manager. You have a client that has asked you to invest some money for them ($1,000,000) for exactly 10 years. Based on your assessment of client's risk tolerance and risk capacity, Medium-Quality Investment grade Corporate bonds are the best fit for the client. Choose appropriately from the following bond list, calculate Prices and Duration for selected bond(s), and specify how much of the client's money should be invested in which of these bonds in order to immunize the portfolio from Interest Rate Risk. (14 points) Note: Settlement date is 11/11/2020 S&P rating Bond Alpha Beta Gamma Delta coupon 2.0% 2.5% AA ask yield 1.5% 3.0% 4.0% 9.5% maturity 7/1/2028 7/1/2028 7/1/2040 7/1/2040 BBB 3.5% 5.0% Suppose you are a private wealth manager. You have a client that has asked you to invest some money for them ($1,000,000) for exactly 10 years. Based on your assessment of client's risk tolerance and risk capacity, Medium-Quality Investment grade Corporate bonds are the best fit for the client. Choose appropriately from the following bond list, calculate Prices and Duration for selected bond(s), and specify how much of the client's money should be invested in which of these bonds in order to immunize the portfolio from Interest Rate Risk. (14 points) Note: Settlement date is 11/11/2020 S&P rating Bond Alpha Beta Gamma Delta coupon 2.0% 2.5% AA ask yield 1.5% 3.0% 4.0% 9.5% maturity 7/1/2028 7/1/2028 7/1/2040 7/1/2040 BBB 3.5% 5.0%
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