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You work in the treasury department for a major manufacturer. You are instructed to build a bond portfolio that will fully insulate the investment from

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You work in the treasury department for a major manufacturer. You are instructed to build a bond portfolio that will fully insulate the investment from movements in interest rates for a capital investment the company will be making in 5.25 years. You can assume that the market weighted average duration of the bond investment is correct. The capital investment will total $25,000,000. These bonds are selected because they make quarterly interest payments. You can build the portfolio using these three different bonds: Seven year zero coupon treasuries bonds, current YTM 3.85%; up to $20,000,000 Six year corporate junk bonds, coupon of 9.70%, YTM 8.45%; up to $20,000,000 Six year emerging market bonds, coupon of 6.20%, YTM 5.35%; up to $20,000,000 A) Given this information what is the goal (solution) for this problem. In other words what would allow you to achieve you mission? 2 points B) In words describe what you want to do, the process needed to follow to achieve what you had in A? 2 points You work in the treasury department for a major manufacturer. You are instructed to build a bond portfolio that will fully insulate the investment from movements in interest rates for a capital investment the company will be making in 5.25 years. You can assume that the market weighted average duration of the bond investment is correct. The capital investment will total $25,000,000. These bonds are selected because they make quarterly interest payments. You can build the portfolio using these three different bonds: Seven year zero coupon treasuries bonds, current YTM 3.85%; up to $20,000,000 Six year corporate junk bonds, coupon of 9.70%, YTM 8.45%; up to $20,000,000 Six year emerging market bonds, coupon of 6.20%, YTM 5.35%; up to $20,000,000 A) Given this information what is the goal (solution) for this problem. In other words what would allow you to achieve you mission? 2 points B) In words describe what you want to do, the process needed to follow to achieve what you had in A? 2 points

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