Exhibit 19.9 Use the Information Below for the Following Problem(S)

Exhibit 19.9
Use the Information Below for the Following Problem(S)
Consider two bonds, both pay annual interest. Bond Y has a coupon of 6% per year, maturity of 5 years, yield to maturity of 6% per year, and a face value of $1000. Bond X has a coupon of 7% per year, maturity of 10 years, yield to maturity of 4% per year, and a face value of $1000.
-Refer to Exhibit 19.9.Assume that your investment horizon is 5 years and your portfolio consists only of Bond Y and Bond X.Indicate the proportions invested in each bond,so that the portfolio is immunized.

A) 50% in Bond Y and 50% in Bond X
B) 76% in Bond Y and 24% in Bond X
C) 36% in Bond Y and 64% in Bond X
D) 100% in Bond X
E) 100% in Bond Y