Exhibit 16-9 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 22

Multiple Choice

Exhibit 16-9
USE THE FOLLOWING INFORMATION FOR THE NEXT 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 16-9. 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

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Definitions:

Asexual Fragmentation

A method of asexual reproduction where an organism breaks into fragments, each of which develops into a new organism.

Bilateral Symmetry

A body plan in which there are two symmetrical halves of the body, with a distinct left and right, matching one another.

Radial Symmetry

A body plan in which body parts are arranged around a central axis, characteristic of many invertebrates like jellyfish and sea urchins.

Deuterostomes

A major group of animals in which the anus develops from the first opening in the embryo, with humans and starfish as examples.