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QUESTION 29 Peter has a fixed income portfolio that consists of Bond A, Bond B, and Bond C. The bonds have durations of 4,6 a
QUESTION 30 Gordon bought a 10-year bond, with a 6% coupon paid semi-annually. He paid $1,078 for the bond. What is the effec
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Answer #1

QUESTION 29 :-

Given,

Weight of bond A = 50% or 0.50

Weight of bond B = 25% or 0.25

Weight of bond C = 25% or 0.25

Duration of bond A = 4

Duration of bond B = 6

Duration of bond C = 10

Solution :-

Duration for the portfolio =(WA) (DA) +(WB) (DB) + (We) (De) where, DA - Duration of bond A DB - Duration of bond B Dc - DuraThe option 'b' is correct.

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