How much of the portfolio value in percentage

Assignment Help Financial Management
Reference no: EM13952313

You need to create a portfolio with duration of 8 years. You can use a 5 year zero-coupon bond and a perpetuity which pays $100 each and every year forever and has yield of 10%. How much of the portfolio value in percentage you would have to invest in the zero-coupon bond, and how much in the perpetuity?

Reference no: EM13952313

Questions Cloud

Six month call options with strike price and cost : Six month call options with strike price of $45 and $50 cost $7 and $4, respectively. What is the maximum gain when a bull spread is created from the calls? What is maximum loss when a bull spread is created from the calls? What is the maximum gain w..
A call option on an asset has a delta : A call option on an asset has a delta of 0.6. A trader has sold 1,000 options and wants to create a delta-neutral position. Should the trader take a long or short position in the asset? How many units of the asset should be bought or sold?
Two more south florida nuclear reactors article : Instructions: Florida Power and Light (FPL) are seeking to add two more nuclear power plants on the current Homestead location where two nuclear power plants already exist.
How many put option contracts should be purchased : A portfolio manager in charge of a portfolio worth $8 million is concerned that the market might decline rapidly during the next six months and would like to use options on the S&P 100 to provide protection against the portfolio falling below $7 mill..
How much of the portfolio value in percentage : You need to create a portfolio with duration of 8 years. You can use a 5 year zero-coupon bond and a perpetuity which pays $100 each and every year forever and has yield of 10%. How much of the portfolio value in percentage you would have to invest i..
How does the benefit work in the united states : What country other than the United States, Mexico, Canada, or China did you analyze? What specific benefit did you analyze? Describe it. How does the benefit work in the United States
California orange county water district : A third successive year of California's worst drought in a century has the Golden State's reservoirs at record lows. Agriculture has been affected, hitting the local economy, while some small communities risk running out of water.
What is the magnitude of its displacement : A cosmic ray plows into Earth's upper atmosphere, liberating a shower of subatomic particles. One of these particles moves downward 3.2 km, then undergoes a collision after which it moves 1.6 km at 27 deg. northward of the vertical. It then underg..
During the execution of the project : During the execution of the project, it becomes obvious to you that the chief project engineer is making decisions that do not appear to be in the best interest of the project. What should you do about this?

Reviews

Write a Review

 

Financial Management Questions & Answers

  What are their overdraft protection fees

Fatimah and Ahmad wants you to do some research of three UAE banks on the internet to find the following information for them, so that they can choose the best Bank to invest, saving or take a loan. What kinds of Checking accounts do they offer, and ..

  Calculate the expected return of your portfolio

Calculate the expected return of your portfolio. Calculate the portfolio beta. Given the information above, plot the security market line on paper. Plot the shares from your portfolio on your graph.

  Banks balance sheet and calculate the banks excess reserves

The Fed makes an open-market purchase of $5 million in an economy in which no bank holds excess reserves and the assumptions of the simple multiplier hold with a reserve requirement of 8 percent. Draw up the bank's balance sheet and calculate the ban..

  What is the cash inflow or outflow from your position

You obtain the following information concerning a stock, a call option, and a put option. What is the cash inflow or outflow from your position? What is profit or loss if the price of the stock stagnates and trades for $42 after three months? What is..

  About the current liabilities

Which of the following are included in current liabilities?

  Asset qualifies as seven-year recovery asset under macrs

Genetic Insights Co. purchases an asset for $18,810. This asset qualifies as a seven-year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, r..

  What will his annual payment be

Cal Lury owes $38,000 now. A lender will carry the debt for seven more years at 8 percent interest. That is, in this particular case, the amount owed will go up by 8 percent per year for seven years. The lender then will require that Cal pay off the ..

  Price of put option necessary to guarantee your sales price

You own a lot in Key West, Florida, that is currently unused. Similar lots have recently sold for $1,370,000. Over the past five years, the price of land in the area has increased 5 percent per year, with an annual standard deviation of 28 percent. W..

  Horsepower motors are under consideration

Two 100-horsepower motors are under consideration by the Mighty Machinery Company. Motor Q costs $5,000 and operates at 90% efficiency. Motor R costs $3,500 and is 88% efficient. How many hours of full-load operation are necessary each year in order ..

  Probabilities of expected return of a stock

Suppose someone tells you that the probabilities of expected return of a stock are as follows

  Rate for four-year-maturity treasury securities

Suppose that the current one-year rate (one-year spot rate) and expected one-year Tbill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows:

  Purchased a zero-coupon bond one year ago

You purchased a zero-coupon bond one year ago for $281.33. The market interest rate is now 7 percent. If the bond had 19 years to maturity when you originally purchased it, what was your total return for the past year?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd