Elliot Karlin is a? 35-year-old bank executive who has just inherited a large sum of money....

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Elliot Karlin is a? 35-year-old bank executive who has justinherited a large sum of money. Having spent several years in the?bank's investments? department, he's well aware of the concept ofduration and decides to apply it to his bond portfolio. In?particular, Elliot intends to use $ 1 $1 million of his inheritanceto purchase 4 U.S. Treasury? bonds:
1. An 8.58%?, ?13-year bond? that's priced at $1,090.45 to yield7.48%.
2. A 7.865%?, ?15-year bond? that's priced at $1027.09 to yield7.56%.
3. A? 20-year stripped Treasury? (zero coupon)? that's priced at$200.05 to yield 8.21%.
4. A? 24-year, 7.49% bond? that's priced at $957.22 to yield7.89%.
Note that these bonds are semiannual compounding bonds.
a. Find the duration and the modified duration of each bond.
b. Find the duration of the whole bond portfolio if Elliot puts$250,000 into each of the 4 U.S. Treasury bonds.
c. Find the duration of the portfolio if Elliot puts $370,000each into bonds 1 and 3 and $130,000 each into bonds 2 and 4.
d. Which portfolio long dash —b or c long dash —should Elliotselect if he thinks rates are about to head up and he wants toavoid as much price volatility as? possible? Explain. From whichportfolio does he stand to make more in annual interest? income?Which portfolio would you? recommend, and? why?

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Part a I have used the excel functions Duration and Mduration Inputs are settlement date which i have arbitrarily assumed to be 01012019 for each of them This doesnt impact any of the answers Maturity date has been assumed to be the same date ie 0101 but as many years later as is the maturity of the bond Type is 2 which reflects See Answer

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Elliot Karlin is a? 35-year-old bank executive who has justinherited a large sum of money. Having spent several years in the?bank's investments? department, he's well aware of the concept ofduration and decides to apply it to his bond portfolio. In?particular, Elliot intends to use $ 1 $1 million of his inheritanceto purchase 4 U.S. Treasury? bonds:1. An 8.58%?, ?13-year bond? that's priced at $1,090.45 to yield7.48%.2. A 7.865%?, ?15-year bond? that's priced at $1027.09 to yield7.56%.3. A? 20-year stripped Treasury? (zero coupon)? that's priced at$200.05 to yield 8.21%.4. A? 24-year, 7.49% bond? that's priced at $957.22 to yield7.89%.Note that these bonds are semiannual compounding bonds.a. Find the duration and the modified duration of each bond.b. Find the duration of the whole bond portfolio if Elliot puts$250,000 into each of the 4 U.S. Treasury bonds.c. Find the duration of the portfolio if Elliot puts $370,000each into bonds 1 and 3 and $130,000 each into bonds 2 and 4.d. Which portfolio long dash —b or c long dash —should Elliotselect if he thinks rates are about to head up and he wants toavoid as much price volatility as? possible? Explain. From whichportfolio does he stand to make more in annual interest? income?Which portfolio would you? recommend, and? why?