CHAPTER 18 QUESTION 8

FINANCE  Investment Analysis and Portfolio Management CHAPTER 18 QUESTION 8
 At the present time, you expect a decline in interest rates and must choose between two   portfolios of bonds with the following characteristics  ：
     Portfolio A          Portfolio B  
 Average maturity            10.5 years            10.0 years 
  Average YTM                     7%                           10% 
  Modified duration            5.7 years            4.9 years  
 Modified convexity         125.18               40.30   
Call features               Noncallable               Deferred call features that range from 1 to 3 years         Select one of the portfolios and discuss three factors that would justify your selection.

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