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You have an obligation of $10,000 payable in 10 years. (We assume a flat yield curve at 6%.) There are two bonds available: BondA is
You have an obligation of $10,000 payable in 10 years. (We assume a flat yield curve at 6%.) There are two bonds available: BondA is a 5%-coupon bond (coupons paid annually) with face value $100, price $92.64 and with a maturity of 10 years. BondB is a 4%-coupon bond (coupons paid annually) with face value $100, price $77.06 and with a maturity of 20 years. Create a portfolio consisting of BondsAandB whose present value and duration corresponds to that of the obligation
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