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To create a bond portfolio with an overall duration of 10 years, the insurance company decides to buy zero coupon bonds with a maturity of
- To create a bond portfolio with an overall duration of 10 years, the insurance company decides to buy zero coupon bonds with a maturity of 20 years (and with a YTM of 7%) to combine with The Bond . To bring the combination of The Bond plus The Zero to a combined portfolio duration of 10 years, what would be the correct mix of The Bond relative to the 20-year Zero? Use the following steps
- A) calculate the percentage amount of The Bond in the portfolio
- B) calculate the percentage amount of The Zero in the portfolio
- C) Can you suggest a simpler investment that would give the insurance company a bond investment with a 10-year duration?
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Dividend Investing For Beginners How To Build Your Investment Strategy Find The Best Dividend Stocks To Buy And Generate Passive Income
Authors: Greg Middleton
1st Edition
B0C1J1WMMJ, 979-8390685440
