Question: I want a detail answer, please don't answer with excel function !! I want a detail answer, please don't answer with excel function !! I

I want a detail answer, please don't answer with excel function!!

I want a detail answer, please don't answer with excel function!! I

I want a detail answer, please don't answer with excel function!!

Question 4 (20 Marks) (A) An investor has the following bond portfolio: Face Value Coupon Maturity Yield (s.a.) Market Value Annual Duration Bond A $50 Million 8% 12 yrs 9.62% $44,306,787 7.652 Bond B $25 Million 11% 8 yrs 9.38% $27,243,887 5.633 Bond C $25 Million 9% 6 yrs 9.10% $24,886,343 4.761 (i) What is the portfolio Macaulay duration? (4 Marks) (ii) The interest rate outlook expects to increase so the investor decides to reduce the portfolio to a target Macaulay duration of 4. The investor decides to keep the weighting on Bond C, how much Bond A and Bond B does the investors need to adjust in order to meet the target? (7 Marks) Question 4 (20 Marks) (A) An investor has the following bond portfolio: Face Value Coupon Maturity Yield (s.a.) Market Value Annual Duration Bond A $50 Million 8% 12 yrs 9.62% $44,306,787 7.652 Bond B $25 Million 11% 8 yrs 9.38% $27,243,887 5.633 Bond C $25 Million 9% 6 yrs 9.10% $24,886,343 4.761 (i) What is the portfolio Macaulay duration? (4 Marks) (ii) The interest rate outlook expects to increase so the investor decides to reduce the portfolio to a target Macaulay duration of 4. The investor decides to keep the weighting on Bond C, how much Bond A and Bond B does the investors need to adjust in order to meet the target? (7 Marks)

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