1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
butalik [34]
3 years ago
7

Your bond portfolio consists of $30 million worth of Treasury STRIPS with 7 years to maturity, and $10 million of Treasury notes

with a Macaulay duration of 3 years. The term structure is flat, and all spot rates are 3%.
What is the modified (not Macaulay) duration of your portfolio?

a) 3 years
b) 4 years
c) Slightly less than 4 years
d) Slightly greater than 4 years
e) None of these
Business
1 answer:
Verdich [7]3 years ago
5 0

Answer:

<em>d) Slightly greater than 4 years</em>

Explanation:

<em>The portfolio's Macaulay period (MaD) is the mean maturity of its retained earnings.</em>

Fifty per cent of cash flows (in terms of PV) come after three years and another fifty per cent arrive after five years, so the MaD is 0.53 + 0.55 = 4.

We must divide the MaD by (1+ytm/2) to get Modified Duration (MoD).

<em>Then portfolio MoD is </em><u><em>4/(1 + 0.02/2) = 3.96.</em></u>

You might be interested in
The emergency food assistance program distributes ___________ for home and institutional use. funds to buy food meals grocery st
GalinKa [24]
Food. Is there anything else to this?
4 0
3 years ago
"Sally is in charge of erecting billboards along highways. The billboards display the logos of newly launched brands in the mark
USPshnik [31]

Answer:

preattentive processing

Explanation:

Preattentive processing -

It refers to the unconscious information , which can be adapted by the environment  , is referred to as preattentive processing .

It refers to the information or the facts that are usually present or adapted by the minds .

The information or data need not be learned again or revised .

As it is a human behavior to connect the things with some predefined knowledge or thoughts .

Hence , from the given scenario of the question ,

The correct term is preattentive processing .

3 0
3 years ago
Imagine you are the executive of a marketing company. Beginning this year, the company will begin conducting an in-house course
blagie [28]

Answer:

1. I think the course should be offered to all people  in retail.2.viruses and  websites you shouldn't be on.3.viruses and malware.4.communication.5.groups so that they can work on their communication skills.6.malware viruses and protection sweeps

Explanation:

6 0
3 years ago
How many of Amway distributors make money
satela [25.4K]
1.5 million distributors
5 0
3 years ago
Your portfolio consists of an index mutual fund which represents the overall market and Treasury bills. The mutual fund has a po
pshichka [43]

Answer:

8.01%

Explanation:

Expected return on mutual fund = Risk-free rate + Market risk premium*Beta

Expected return on mutual fund = 3% + 7.7%*1

Expected return on mutual fund = 10.70%

Best estimate of the portfolio expected rate of return = Weight of  mutual fund*Expected return on mutual fund + Weight of  risk-free Treasury bills*Expected return on risk-free  Treasury bills

Best estimate of the portfolio expected rate of return = 65%*10.70 + 35%*3

Best estimate of the portfolio expected rate of return = 0.08005

Best estimate of the portfolio expected rate of return = 8.01%

7 0
3 years ago
Other questions:
  • Question 1 A firm sold goods for $50,000. $10,000 was paid in cash, and the remaining $40,000 was assigned to a customer’s credi
    13·1 answer
  • Warren Company has taken a position in its tax return to claim a tax credit of $30 million (direct reduction in taxes payable) a
    10·1 answer
  • Mustard Corporation (a C corporation) owns 15% of the stock of Burgundy Corporation (a C corporation), which pays an annual divi
    7·1 answer
  • During March, the production department of a process operations system completed and transferred to finished goods 23,000 units
    6·1 answer
  • Explain the type of data the following scenario describes.
    7·1 answer
  • A firm has issued $25 million in long-term bonds that now have 9 years remaining until maturity. The bonds carry a 9% annual cou
    11·1 answer
  • A firm has a demand function p=108-5q and the cost function c=-12q+q^2. find the price at which profit is maximum. find the maxi
    7·1 answer
  • Explain the theory of absolute advantage
    7·1 answer
  • Sandra wants to deposit $100 each year for her son. if she places it in an investment account that averages a 5% annual return,
    10·1 answer
  • Rush company had net income of $192 million and average total assets of $1,950 million. its return on assets (roa) is?
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!