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You start a fund that specializes in purchasing junk bonds. You plan on purchasing 500m USD worth of junk bonds with a duration of 5
You start a fund that specializes in purchasing junk bonds. You plan on purchasing 500m USD worth of junk bonds with a duration of 5 years. You will finance 20% of the purchase with your own capital and 80% with debt. Because you wish to focus on buying under valued junk bonds (and not the yield curve), you wish to immunize your portfolio from interest rate changes. What duration should your debt have to immunize your portfolio
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