1a PDX will issue a 4 year note with a 4% annual coupon. The yield on similar bonds is 4% (i.e., the required rate of the return on the PDX bond is 4%). The par value is 100. Establish the modified duration of the bond.

1b. The beta of IBM, CSCO, and AAPL are 1.3, 1.2, and 0.9 respectively. Establish the beta of a portfolio with 25% in IBM, 25% in CSCO, 25% in AAPL, and 25% in Treasuries.

1c.The modified duration of IBM, CSCO, AAPL, and my treasury bonds are 11, 14, 5, and 27. Establish the modified duration of a equally weighted portfolio of the four holdings. With respect to my holdings, describe:

1. a risk on strategy wherein I believe interest rates are heading much lower.
2. a risk off strategy wherein I believe interest rates are heading much higher.