You manage a portfolio and are instructed to ensure you have at least $350,000 at the end

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You manage a portfolio and are instructed to ensure you have at least $350,000 at the end of 6 years. The current value is $250,000. You can invest at the current interest rate of 8%. You have decided to use a contingent immunisation strategy.

What amount would need to be invested today, given the current interest rate?

Suppose 4 years pass, and the interest rate rises to 9%. What is the trigger point for the portfolio at this time? (That is, how low can the value of the portfolio be before you will be forced to immunise to ensure you achieve the minimum acceptable return).

Finally, if the portfolio's value after 4 years is $291,437, what should you do?

Posted Date: Jun 06, 2024 02:07 AM

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You manage a portfolio and are instructed to ensure you have at least $350,000 at the end

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