Question: The Data contains information about three bonds. Use this data to: Compute the amount to be invested to meet the future liability noted in the
- The Data contains information about three bonds. Use this data to:
- Compute the amount to be invested to meet the future liability noted in the dat This future liability is due in 10 years.
- Find a combination of Bond 1 and Bond 2 having a target duration of 10 years.
- Find a combination of Bond 1 and Bond 3 having a target duration of 10 years.
- Perform an analysis using a data table and an accompanying graph to determine which of the following options (i.e., a portfolio consisting of Bond 1 and Bond 2, a portfolio consisting of Bond 1 and Bond 3, or a portfolio consisting of Bond 2) would be preferred to attempt to immunize this obligation. PLEASE USE EXCEL AND SHOW FORMULAS
| Yield to maturity (Expected/Current) | 8% | ||
| Number of Years to Future Liability | 10.00 | ||
| Future Liability | $10,000.00 | ||
| Bond 1 | Bond 2 | Bond 3 | |
| Coupon rate | 6.00% | 7.000% | 8.00% |
| Maturity (Years) | 12 | 18 | 30 |
| Face value | 1,000 | 1,000 | 1,000 |
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