You are managing a portfolio of $1.7 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity 6 years, and a perpetuity, each currently yielding 10%.
a. How much of each bond will you hold in your portfolio?
b. How will these fractions change next year if target duration is now 9 years?
The strategies for bond portfolio management are aimed at achieving a given objective on the basis of managing fixed income investments. This objective could be to maximize return on investment which is basically achieved by minimizing risk and managing interest rates.

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30-11-2022
Business

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You are managing a portfolio of $1.7 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity 6 years, and a perpetuity, each currently yielding 10%.
a. How much of each bond will you hold in your portfolio?
b. How will these fractions change next year if target duration is now 9 years?
The strategies for bond portfolio management are aimed at achieving a given objective on the basis of managing fixed income investments. This objective could be to maximize return on investment which is basically achieved by minimizing risk and managing interest rates.

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GouravDayma GouravDayma · Answer 1 · 2022-12-03T07:34:46+01:00

Investors will concentrate on the most liquid investment vehicles for the purposes of this section: stocks, fixed-income securities, cash and equivalents.

What function does an investor serve?

The market participant that the general public most frequently associates with the stock market is an investor. Investors are individuals who buy stock in a company with the intention of holding it for a long time because they think it will do well in the future.

Do investors count as owners?

You are not a owner; you are a lending investor. You have invested in ownership if you purchase stock in a corporation. Your proportionate part of the company's profits will be deducted from the return you receive.

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