Reference no: EM131072843
Grace Hesketh is the owner of an extremely successful dress boutique in downtown Chicago. Although high fashion is Grace’s first love, she’s also interested in investments, particularly bonds and other fixed income securities. She actively manages her own investments and over time has built up a substantial portfolio of securities. She’s well versed on the latest investment techniques and is not afraid to apply those procedures to her own investments. Grace has been playing with the idea of trying to immunize a big chunk of her bond portfolio. She’d like to cash out this part of her portfolio in seven years and use the proceeds to buy a vacation home in her home state of Oregon. To do this, she intends to use the $ 200,000 she now has invested in the following four corporate bonds (she currently has $ 50,000 invested in each one). 1. A 12 year, 7.5% bond that’s currently priced at $ 895. 2. A 10 year, zero coupon bond priced at $ 405. 3. A 10 year, 10% bond priced at $ 1,080. 4. A 15 year, 9.25% bond priced at $ 980. (Note: These are all noncallable, investment grade, nonconvertible / straight bonds.)
Questions
1. Using one or more of the four bonds described above, is it possible to come up with a $ 200,000 bond portfolio that will exhibit the duration characteristics Grace is looking for? Explain.
2. Using one or more of the four bonds, put together a $ 200,000 immunized portfolio for Grace. Because this portfolio will now be immunized, will Grace be able to treat it as a buy and-hold portfolio one she can put away and forget about? Explain.
Build a central commerce platform on sms
: Research & Financial Projections should be conducted based on that idea - What is the customer problem that my business will be solving
|
Purpose of the ethics and business conduct program
: Review the Learning from Experience feature titled "Boeing's Development of Teams and their Leaders." Go to the Boeing website at www.boeing.com. In the search box, enter "ethics" and read the statement on "The purpose of the Ethics and Business C..
|
Could magic man delegate the contract to another contractor
: If Magic refused to do the work prior to the agreed start date, what would that be called and what options would Wilma and Nemo have? Could Magic Man delegate the contract to another contractor
|
His total pension funds have an accumulated value
: Graham Bell has just retired after 30 years with the telephone company. His total pension funds have an accumulated value of $400,000, and his life expectancy is 16 more years. His pension fund manager assumes he can earn a 10 percent return on his a..
|
Particularly bonds and other fixed income securities
: Grace Hesketh is the owner of an extremely successful dress boutique in downtown Chicago. Although high fashion is Grace’s first love, she’s also interested in investments, particularly bonds and other fixed income securities. Using one or more of th..
|
Party used the distributive negotiations strategy
: Have you been involved in negotiations in which the other party used the distributive negotiations strategy? Describe the situation. What did you do in response to the tactics used with this strategy? How did you feel? What was the outcome?
|
What argument does mm have to defend against bernstein suit
: After lengthy telephone negotiations, Bernstein and Metal Manufacturers (MM) entered into an agreement whereby MM agreed to sell Bernstein 20,000 pounds of nickel cathodes at $4.60 per pound. What argument does MM have to defend against Bernstein's..
|
Determine the exchange table for this economy
: Determine the exchange table for this economy, where the columns describe how the output of each sector is exchanged among the three sectors
|
What is the initial weighted average cost of capital
: The McGee Corporation finds it is necessary to determine its marginal cost of capital. McGee’s current capital structure calls for 50 percent debt, 20 percent preferred stock, and 30 percent common equity. What is the initial weighted average cost of..
|