Q2. Mr. Sunder Lal who is a chartered accountant needs Rs. 6 lakhs after two years. Out of various options he has shortlisted two bonds for investment in the preliminary screening. The two bonds which he has shortlisted for investment are a one year bond with 7 % coupon and a three year bond with 10% coupon. How he can immunize himself against price and reinvestment risk if the interest rate in the economy is 9%. His client Mr. Gavaskar expects the interest rates to decrease. He has an option to invest in either of the two bonds available i.e. bond X and Bond Y. Both the bonds have the same duration and yield to maturity. Bond X has a longer maturity and lower coupon than Bond Y. Which Bond should he advise Mr. Gavaskar buy if he expects the interest rates to increase and why? Mr Gavaskar also wants to know how an individual's investment strategy may change over his/her lifetime. Q2. Mr. Sunder Lal who is a chartered accountant needs Rs. 6 lakhs after two years. Out of various options he has shortlisted two bonds for investment in the preliminary screening. The two bonds which he has shortlisted for investment are a one year bond with 7 % coupon and a three year bond with 10% coupon. How he can immunize himself against price and reinvestment risk if the interest rate in the economy is 9%. His client Mr. Gavaskar expects the interest rates to decrease. He has an option to invest in either of the two bonds available i.e. bond X and Bond Y. Both the bonds have the same duration and yield to maturity. Bond X has a longer maturity and lower coupon than Bond Y. Which Bond should he advise Mr. Gavaskar buy if he expects the interest rates to increase and why? Mr Gavaskar also wants to know how an individual's investment strategy may change over his/her lifetime