Question: Q#5. [10 Points] At the present time, you expect a decline in interest rates and must choose between two portfolios of bonds with the following

Q#5. [10 Points] At the present time, you expect a decline

Q#5. [10 Points] At the present time, you expect a decline in interest rates and must choose between two portfolios of bonds with the following characteristics: Average maturity Average YTM Modified duration Modified convexity Portfolio A 10.5 years 7% 5.7 years 125.18 Portfolio B 10.0 years 10% 4.9 years 40.3 Call features Noncallable Deferred call features that range from 1 to 3 years Select one of the portfolios and discuss three factors that would justify your selection

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