You expect interest rates to decline over the next six months.
a. Given your interest rate outlook, state what kinds of bonds you want in your portfolio in terms of duration, and explain your reasoning for this choice.

b. You must make a choice between the following three sets of noncallable bonds. For each set, select the bond that would be best for your portfolio, given your interest rate outlook and the consequent strategy set forth in Part a. In each case, briefly discuss why you selected thebond.

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Maturity Coupon 10% 5% 5% 8% 12% 12% Yield to Matur Bond A Bond B Set 1 Set 2 Set 3: 15 years 15 years Bond C15 years years 12 years 15 years 10% 8% 10% 10% 12% 8% Bond D Bond E Bond F 10