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Today is 1 July, 2019. Camilla has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and
Today is 1 July, 2019. Camilla has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Camilla purchased all instruments on 1 July 2011 to create this portfolio, which is composed of 34 units of instrument A and 29 units of instrument B. - Instrument A is a zero-coupon bond with a face value of $100. This bond matures at par. Its maturity date is 1 January 2029. - Instrument B is a Treasury bond with a coupon rate of j2=3.91% p.a. and a face value of $100. This bond matures at par. Its maturity date is 1 January 2022. What is the duration of instrument B? Express your answer in terms of years and round your answer to three decimal places. Assume a yield rate of j2=4.04% p.a. a. 4.812 years b. 2.406 years c. 2.860 years d. 5.719 years Jinxia is contemplating investing in an Australian Treasury bond. It is 2018 , and the bond she is considering has a coupon rate of j2=1.03% p.a. and a face value of $100. The maturity date of the bond is 15 May 2033. Ultimately Jinxia purchased this bond on 6 May 2018. What was her purchase price (rounded to four decimal places)? Assume a purchase yield of j2=1.28% p.a. a. $97.0826 b. $97.19 c. $97.0821 d. $96.5673
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