A Fixed Income Portfolio Manager Sets a Minimum Acceptable Rate

question 31

Multiple Choice

A fixed income portfolio manager sets a minimum acceptable rate of return on the bond portfolio at 5% per year over the next 4 years.The portfolio is currently worth $10 million.One year later interest rates are at 6%.What is the portfolio value trigger point at this time that would require him to immunize the portfolio?

• A) $12,155,063
• B) $10,205,625
• C) $9,627,948
• D) $10,500,000

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Definitions:

Australopithecine Fossils

Prehistoric remains of Australopithecines, an early group of hominins that lived in Africa and are considered ancestral to humans, characterized by bipedal locomotion and relatively small brain sizes.

Million Years

A unit of time equal to one thousand thousand years, often used to express geological and cosmological time scales.

Definite

Clearly stated, decided, or defined; not vague or ambiguous.

Dietary Challenge

A specific difficulty or obstacle that an individual or group faces in meeting their nutritional needs or preferences.