Exhibit 19.9 Use the Information Below for the Following Problem(S)

question 15

Multiple Choice

Exhibit 19.9
Use the Information Below for the Following Problem(S)
Consider two bonds, both pay annual interest. Bond Y has a coupon of 6% per year, maturity of 5 years, yield to maturity of 6% per year, and a face value of $1000. Bond X has a coupon of 7% per year, maturity of 10 years, yield to maturity of 4% per year, and a face value of $1000.
-Refer to Exhibit 19.9.Assume that your investment horizon is 5 years and your portfolio consists only of Bond Y and Bond X.Indicate the proportions invested in each bond,so that the portfolio is immunized.

• A) 50% in Bond Y and 50% in Bond X
• B) 76% in Bond Y and 24% in Bond X
• C) 36% in Bond Y and 64% in Bond X
• D) 100% in Bond X
• E) 100% in Bond Y

Understand the purpose and preparation of liquidation accounts and the calculation of surplus or deficiency.

Recognize different types of liquidation and the parties that can initiate them.

Calculate the surplus or deficiency apportioned to shareholders in the event of liquidation.

Differentiate between ordinary, preferential, and deferred creditors in the context of company liquidation.

---

Definitions:

Maryland

One of the original 13 colonies in the United States, founded in 1632 as a haven for English Roman Catholics.

Economic Development

The process by which a nation improves the economic, political, and social well-being of its people.

Shipbuilding

The construction of ships and other floating vessels, a critical industry for trade, transportation, and military purposes.

Ironworks Industry

The sector involved in the smelting of iron ore, casting, and the forging of iron and steel to produce various goods and structures.