Solved: Show that both portfolios have the same duration, Finance Basics

Show that both portfolios have the same duration

Portfolio A consists of a 1-year zero-coupon bond with a face value of $2,000 and a 10-year zero-coupon bond with a face value of $6,000. Portfolio B consists of a 5.95-year zero-coupon bond with a face value of $5,000. The current yield on all bonds is 10% per annum.Show that both portfolios have the same duration.

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Finance Basics: Show that both portfolios have the same duration

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Portfolio B consists of a 5.95-year zero-coupon bond with a face value of $5,000. The current yield on all bonds is 10% per annum. Show that both portfolios have the same duration.

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Show that both portfolios have the same duration

Reference No:- TGS0680869

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

Q : How many five and ten peso coins are there in piggy bank

Q : How much would he have at the end

Q : Margin of error

Q : What balance will be in the retained earnings account

Q : Show that both portfolios have the same duration

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Show that both portfolios have the same duration

Reference No:- TGS0680869

Recent Questions Asked Finance Basics

Q : How many five and ten peso coins are there in piggy bank

Q : How much would he have at the end

Q : Margin of error

Q : What balance will be in the retained earnings account

Q : Show that both portfolios have the same duration

Q : Compute the various ratios for each company

Q : Find cost of capital on the basis of cost of equity

Q : Standard deviations from the mean

Q : How might you respond to this risk in terms of staffing

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