Take Home Quiz 2 1. Today is 1 July 2018. Janet has a portfolio which consists of three differ- ent types of financial instruments (henceforth referred to as instrument A, instrument B and instrument...

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Answered Same DayOct 14, 2020ACST201

Answer To: Take Home Quiz 2 1. Today is 1 July 2018. Janet has a portfolio which consists of three differ- ent...

Prabhash answered on Oct 15 2020
168 Votes
A
    Portfolio Combination
    Today Date    1-Jul-18                Answer a
    Instrument A    100    Units            (i)    Yield Rate    3.50%
    In
strument B    150    Units                Maturity Remaining    6.5095890411
    Instrument C    250    Units                CMP of A    $ 79.94
                        (ii)
    Instrument A                        Yield Rate    3.50%
    Zero Coupon Bond                        Maturity Remaining    2.002739726
    FV    100                    CMP of B    $ 100.10
    Maturity Date    1-Jan-25
                        (iii)
    Instrument B                        Yield Rate    3.50%
    Coupon Rate J2    3.55%                    Maturity Remaining    1.504109589
    FV    100                    CMP of C    $ 99.64
    Maturity Date    1-Jul-20
    Instrument C
    Coupon Rate J2    3.25%
    FV    100
    Maturity Date    1-Jan-20
b
    Portfolio Combination
    Today Date    1-Jul-18                Answer B
    Instrument A    100    Units            (i)    Yield Rate    3.50%
    Instrument B    150    Units                Maturity Remaining    6.5095890411
    Instrument C    250    Units                Duration    Duration of the A is 6.5 years because duration of zero coupon bond is always the equal to maturity of the A
                        (ii)
    Instrument A                        Yield Rate    3.50%
    Zero Coupon Bond                        Maturity Remaining    2.002739726
    FV    100                    Period    Cashflow    Priod * Cash Flow    PV of $1 at 3.5%    PV of Cashflow
    Maturity...
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