Exhibit 16-8 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

Exhibit 16-8
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Consider two bonds, both pay annual interest. Bond C 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 D has a coupon of 8% per year, maturity of 15 years, yield to maturity of 6% per year, and a face value of $1000.
-Refer to Exhibit 16-8. Assume that your investment horizon is 6 years and your portfolio consists only of Bond C and Bond D. Indicate the proportions invested in each bond, so that the portfolio is immunized.

A) 50% in Bond C and 50% in Bond D
B) 64% in Bond C and 36% in Bond D
C) 36% in Bond C and 64% in Bond D
D) 100% in Bond D
E) None of the above