USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 11

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider two bonds: both pay annual interest. Bond C has a coupon of 6 percent per year, maturity of five years, yield to maturity of 6 percent per year, and a face value of $1000. Bond D has a coupon of 8 percent per year, maturity of 15 years, yield to maturity of 6 percent per year, and a face value of $1000.
-Refer to Exhibit 13.12. Assume that your investment horizon is 6 years and your portfolio consists only of Bond C and Bond D. Indicate the proportions invested in each bond so that the portfolio is immunized.

• A) 50 percent in Bond C and 50 percent in Bond D
• B) 64 percent in Bond C and 36 percent in Bond D
• C) 36 percent in Bond C and 64 percent in Bond D
• D) 100 percent in Bond D
• E) 100 percent in Bond C

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Definitions:

Fundamental Attribution Error

The tendency to overestimate the effect of personality or disposition and underestimate the influence of situational factors when explaining others' behavior.

Peripheral Route Persuasion

Attitude-change path in which people are influenced by incidental cues, such as a speaker’s attractiveness.

Belief-Based Feelings

Emotions that are deeply rooted in personal convictions and values, influencing an individual's psychological state.

Dispositional Attributions

The tendency to attribute people's behaviors to their internal characteristics, such as personality, beliefs, or motivations, rather than to situational factors.