diff_months: 8

FINM2003 - Fixed Income Portfolio Management - Finance Assignment Help

Get 25% Off Order New Solution
Added on: 2021-03-05 12:46:41
Order Code:
Question Task Id: 0

Connect with FINM2003 Expert Now

Assignment Task 

 

Instructions to Candidates:

1. This exam paper comprises a total of 5 pages. Please ensure your paper has the correct number of pages.
2. The exam includes a total of 4 questions, each containing multiple parts. The questions are of unequal value, with marks indicated for each question. You must attempt to answer all questions.
3. Do not round calculations until providing your final answer to each question. Final answers should be rounded to 2 decimal places.
4. Include all workings for each question, as marks will not be awarded for answers that omit necessary workings.
5. Ensure you include your student number on your answer book.

Question 1 

a) Describe TWO anomalies that relate to the EMH, and in doing so, discuss in words the trading strategies you could adopt to exploit them. (4 Marks)

b) Explain why information processing biases, behavioural biases, and limits to arbitrage may act as impediments to market efficiency. In answering, describe their role, and provide a specific example of each.

c) What is convexity and why is it important in fixed income portfolio management?

d) Explain the impact on a bond’s yield and expected life by adding a call feature to a proposed bond issue. Describe one advantage and one disadvantage of including callable bonds in your portfolio.

Question 2

a) You are the manager of a fund that has an obligation to pay $10,000 in 3 years, $8,500 in each of the following two years, and $17,000 in 6 years. You would like to ensure you have the capacity to pay these obligations when due, and given your uncertainty about the level of the future market interest rate (which is currently 6% p.a.), you have chosen to immunise your obligation. Upon considering your options, you have decided to immunise your liability with a combination of zero-coupon bonds that mature in 5 years, and a perpetuity making annual payments (at the current rate of interest).
 

(i) Calculate the duration of the liability 
(ii) Calculate the duration of the zero-coupon bond and the perpetuity.
(iii) What proportion of your investment should be put into the zero-coupon bond, and what proportion into the perpetuity, to immunise your position?
(iv) How much, in dollars, should you invest in the zero-coupon bond and the perpetuity?
(v) What is the face value of your investment in the zero-coupon bond?

 

 

This (FINM2003) Finance  Assignment has been solved by our Finance experts at TV Assignment Help. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.
Be it a used or new solution, the quality of the work submitted by our assignment experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.

  • Uploaded By : William
  • Posted on : March 04th, 2019
  • Downloads : 0

Order New Solution

Review Question

Please enter your email

Can't find what you're looking for?

Coupon Code: SAVEBIG

Apply On Checkout

Get Assignment done through MAS Certified Experts

Grab Now TnC Apply
cancel

Choose a Plan

Premium

80 USD
  • All in Gold, plus:
  • 30-minute live one-to-one session with an expert
    • Understanding Marking Rubric
    • Understanding task requirements
    • Structuring & Formatting
    • Referencing & Citing
Most
Popular

Gold

30 50 USD
  • Get the Full Used Solution
    (Solution is already submitted and 100% plagiarised.
    Can only be used for reference purposes)
Save 33%

Silver

20 USD
  • Journals
  • Peer-Reviewed Articles
  • Books
  • Various other Data Sources – ProQuest, Informit, Scopus, Academic Search Complete, EBSCO, Exerpta Medica Database, and more