Question
You manage a bond portfolio of 300,000. The target duration is 20 years. You can choose from two bonds: a zero coupon bond with maturity
You manage a bond portfolio of 300,000. The target duration is 20 years. You can choose from two bonds: a zero coupon bond with maturity of 300 years and a perpetuity yielding 10%. Then, the PV of the zero coupon bond is closest to:
Note: The duration of perpetuity is (1+y)/y where y= yield to maturity
- 9,340
- 12,540
- 125,400
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Financial Statement Analysis
Authors: Andrew P.C.
1st Edition
1520985002, 978-1520985008
