Suppose a bond manager owns $5 million par value of bond X which trades at $70, has a modihed duration of 6, and has a par value of $100. The manager wants to swap bond X for bond Y, which trades at $85, has a modified duration of 35, and has a par value of $100. If the manager wants the dollar duration of bond Y to be the same as the dollar duration of bond X how much in par value of bond Y should the manager buy? O $8.571,428.57 O $6.000,000.00 O $10,084,033.61 O $7,058,823.53

Suppose a bond manager owns $5 million par value of bond X which trades at $70, has a modihed duration of 6, and has a par value of $100. The manager wants to swap bond X for bond Y, which trades at $85, has a modified duration of 35, and has a par value of $100. If the manager wants the dollar duration of bond Y to be the same as the dollar duration of bond X how much in par value of bond Y should the manager buy? O $8.571,428.57 O $6.000,000.00 O $10,084,033.61 O $7,058,823.53

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter20: Hybrid Financing: Preferred Stock, Warrants, And Convertibles

Section: Chapter Questions

Problem 7Q

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