Exhibit 19.10 Use the Information Below for the Following Problem(S)

question 72

Multiple Choice

Exhibit 19.10
Use the Information Below for the Following Problem(S)
You are creating a portfolio that consists of the following two bonds. Bond A pays an annual 7% coupon, matures in two years, has a yield to maturity of 8%, and a face value of $1,000. Bond B pays an annual 8% coupon, matures in three years, has a yield to maturity of 9%, and a face value of $1,000.
-Refer to Exhibit 19.10.Assume that your investment horizon is 2 years and your portfolio consists only of bonds A and B.What proportion should be invested in each bond to immunize the portfolio?

• A) Invest 72.4% in bond A and 27.6% in bond B.
• B) Invest 68.3% in bond A and 31.7% in bond B.
• C) Invest 58.5% in bond A and 41.5% in bond B.
• D) Invest 31.7% in bond A and 68.3% in bond B.
• E) Invest 27.6% in bond A and 72.4% in bond B.

---

Definitions:

Dying

The process of approaching death, including the cessation of biological functions that sustain life.

Disease

A disorder of structure or function in a human, animal, or plant, especially one that produces specific symptoms or affects a specific location.

Sudden Infant Death Syndrome

The unexplained death, usually during sleep, of a seemingly healthy baby less than a year old.

Processing Death

The cognitive and emotional ways in which individuals understand and cope with death and grieving.