Question
You invest in a fixed-income portfolio that has only two annual-coupon bonds. The YTM for both bonds is 7.5%. Bond Quest a 4-year, 4.0%
You invest in a fixed-income portfolio that has only two annual-coupon bonds. The YTM for both bonds is 7.5%. Bond Quest a 4-year, 4.0% coupon with a $1,000 face value; current price of $882.77 Bond Rapid is an 8-year, 11.0% coupon with a $1,000 face value; current price of $1,205.01 What is the portfolio duration, that is, the duration of both instruments considered together, using the prices of the bonds? (Hint: This is not just the arithmetic average of the two individual bond durations.) 5.25 years 4.84 years 5.01 years O 3.76 years 4.42 years
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Global Investments
Authors: Bruno Solnik, Dennis McLeavey
6th edition
321527704, 978-0321527707
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