To Create a Portfolio with a Duration of 4 Years

question 10

Multiple Choice

To create a portfolio with a duration of 4 years using a 5-year zero-coupon bond and a 3-year 8% annual coupon bond with a yield to maturity of 10%, one would have to invest ________ of the portfolio value in the zero-coupon bond.

• A) 50%
• B) 55%
• C) 60%
• D) 75%

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Definitions:

Intrafunctional Scope

Refers to activities and operations within a single function or department of an organization, focusing on its internal capabilities and efficiency.

Outsourcing

The practice of hiring external firms to handle work normally performed within a company, often to cut costs or focus on core business competencies.

Uncertainty

The lack of certainty or predictability about the outcome of an event, often requiring risk management strategies.

Competitive Strategy

A planned method of positioning a company in the market and gaining an edge over competitors, often by analyzing strengths, weaknesses, opportunities, and threats.