You are hired as an investment manager and given a $7.0 million bond portfolio to manage. You calculate the duration of the liability to be 5.08 years. The client restricts you to two bond issues, both of which come in denominations of $1000
The Discovery Cafe Bond has a duration of 4.28 years and is quoted at 82.690
The Tardis Intertemporal Bond has a duration of 5.40 years and is quoted at 107.790
A. To immunize the portfolio you need to put how much % of the portfolio into Discovery Cafe bonds and how much % of the portfolio into Tardis Intertemporal bonds ?
B. To do this you must buy how many Discovery Cafe bonds and Tardis Intertemporal bonds?
C. This will leave residual cash of how many dollars?