Exhibit 16-8 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 7

Multiple Choice

Exhibit 16-8
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Consider two bonds, both pay annual interest. Bond C 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 D has a coupon of 8% per year, maturity of 15 years, yield to maturity of 6% per year, and a face value of $1000.
-Refer to Exhibit 16-8. 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% in Bond C and 50% in Bond D
• B) 64% in Bond C and 36% in Bond D
• C) 36% in Bond C and 64% in Bond D
• D) 100% in Bond D
• E) None of the above

---

Definitions:

Girdle

Belt or zone; the bony region where the limbs attach to the body.

Range of Movements

The entire spectrum of motion that a joint can achieve, typically involving its capacity for bending and straightening.

True Ribs

The upper seven pairs of ribs that are directly attached to the sternum by their costal cartilages, providing protection to the thoracic cavity.

Sternum

A long flat bone located in the center of the chest, which connects to the ribs via cartilage and protects vital organs like the heart and lungs.