A Bond Portfolio Consists of the Following Three Fixed-Rate Bonds

question 10

Multiple Choice

a bond portfolio consists of the following three fixed-rate bonds. assume annual coupon payments and no accrued interest on the bonds. Prices are per 100 of par value. $$\begin{array} { l r c c c c r } \text { Bond } & \text { Maturity } & \begin{array} { c } \text { Market } \\\text { Value }\end{array} & \text { Price } & \text { Coupon } & \begin{array} { c } \text { Yield-to- } \\\text { Maturity }\end{array} & \begin{array} { r } \text { Modified } \\\text { Duration }\end{array} \\\hline \text { A } & \text { 6 years } & 170,000 & 85.0000 & 2.00 \% & 4.95 \% & 5.42 \\\text { B } & 10 \text { years } & 120,000 & 80.0000 & 2.40 \% & 4.99 \% & 8.44 \\\text { C } & 15 \text { years } & 100,000 & 100.0000 & 5.00 \% & 5.00 \% & 10.38 \\\hline\end{array}$$ The bond portfolio's modified duration is closest to:

• A) 7.62.
• B) 8.08.
• C) 8.20.

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Definitions:

Government Interference

Actions by government bodies that affect the operations of businesses, organizations, or individual freedoms, often viewed negatively by those who advocate for minimal governmental involvement.

Charles Beard

An influential American historian who proposed that the Constitution was designed to protect the economic interests of its framers.

U.S. Constitution

The supreme law of the United States, established in 1787, outlining the nation's fundamental laws and principles, and the structure of its government.

Special-Interest Group

A group formed to advocate for specific interests or issues within a political, economic, or social context.