(Total: 20 marks) Question Four a) Briefly discuss contingent immunization. Is this form of bond portfolio management strategy an active, passive, or combination of both, strategy b) You have the following obligations and expected cash inflows for the next five years: (2 marks) Time Obligation (KES) 0 10,000 20,000 1,000 Cash Inflow (KES) 5,000 12,000 I year 2 years 3 years 4 years The following bonds are available at the present time (making annual coupon payments): Bond Maturity Coupon Price (KES) Par value (KES) 096 90909091 1000 2 5% 91322314 1000 1096 1000.0000 1000 1000 3 D 4 0% 683.01346 Required G) Construct a portfolio using bonds B and C that immunizes you against parallel (11 marks) changes in the term structure (i) Under what circumstances would these immunized portfolios protect you from (3 marks) interest rate risk? (Total: 20 marks) Question Four a) Briefly discuss contingent immunization. Is this form of bond portfolio management strategy an active, passive, or combination of both, strategy b) You have the following obligations and expected cash inflows for the next five years: (2 marks) Time Obligation (KES) 0 10,000 20,000 1,000 Cash Inflow (KES) 5,000 12,000 I year 2 years 3 years 4 years The following bonds are available at the present time (making annual coupon payments): Bond Maturity Coupon Price (KES) Par value (KES) 096 90909091 1000 2 5% 91322314 1000 1096 1000.0000 1000 1000 3 D 4 0% 683.01346 Required G) Construct a portfolio using bonds B and C that immunizes you against parallel (11 marks) changes in the term structure (i) Under what circumstances would these immunized portfolios protect you from (3 marks) interest rate risk