A... _ , I'vv _ v... a \"a...\" .uuu-.-.u-.uu--.uu _ - 5-H"-.- Question 3 (a) You expect interest rates to decline over the next six months. (i) Given your interest rate outlook, state what kinds of bonds you want in your portfolio in terms of duration and explain your reasoning for the choice. (ii) You must make a choice between the following three sets of bonds. In each case, select the bond that would be best for your portfolio given your interest rate outlook and the consequent strategy set forth in part (i). In each case, briey discuss why you select the bond. Case 1: 15 years 15 ears Case 2: 15 years 10 ears Case 3: Bond E 12 years 12% 12% Bond F 15 years 12% 8% (2 + 6 = 8 marks)