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Excel Project Due: March 2, 2021 As the bond portfolio manager you are concerned about the impact of changing Interest rates on your portfolio value. Use the information below and excel functions to determine the value of the current bond portfolio, the portfolio yield and the portfolio duration. Assuring that interest rate changes will impact all bonds equally what is the value of the bond portfolio if interest rates increase by 0.25% or 0.5%? From the additional bands provided, which hand, ifadded to the bond portfolio will help insulate the portfolio from interest rate risk? Total Value Portfolio Yield Duration Portfolio Duration Coupons/Year 2 2 Quantity of Bonds in Portfolio 490 340 S&P AA A Issuer Name Walmart Wells Fargo Ford Motors Johnson & Johnson Macys Coupon 7.550% 3.500% 9.950% 6.730% 8.375% Maturity 2/15/30 10/26/29 2/15/32 11/15/23 6/15/25 Yield 1.741% 3.526% 5.744% % 0.411% 3.074% Date 2/23/21 2/23/21 2/23/21 2/23/21 2/23/21 Price Face Value $ 148.08 $ 100.00 $ 99.93 $ 100.00 $ 134.10 $ 100.00 $ 117.12 $ 100.00 $ 110.75 $ 100.00 BB 2 2 2 350 510 805 BB What is the value of the bond portfolio? Answer: What is the portfolio yield? Answer: What is the duration of the bond portfolio? Answer: If interest rates increase by 0.25% what is the value afhand portfolia? Issuer Name Yield Price Total Value Walmart Wells Fargo Ford Motors Johnson & Johnson Macys Answer: If interest rates increase by 0.50% what is the value of bond portfolio? Issuer Name Yield Price Total Value Walmart Wells Fargo Ford Motors Johnson & Johnson Macys Answer: If you wanted to reduce the interest rate sensitivity of your bond portfolio which of the following bonds would you buy? Why? Yield Price Total Value Issuer Name Walmart Wells Fargo Ford Motors Johnson & Johnson Macys Answer: If interest rates increase by 0.50% what is the value of bond portfolio? Issuer Name Yield Price Total Value Walmart Wells Fargo Ford Motors Johnson & Johnson Macys Answer: If you wanted to reduce the interest rate sensitivity of your bond portfolio which of the following bonds would you buy? Why? Issuer Name Coupon Coupons/Year Maturity S&P Yield Date Price Apple 2.400% 5/3/23 AA+ 0.289% 2/23/21 $ 104.60 Intel 4.800% 2 10/1/41 A+ 2.956% 2/23/21 $ 128.30 Caterpillar 2.850% 2 6/1/22 A 0.244% 2/23/21 $ 103.30 N N N Answer: Excel Project Due: March 2, 2021 As the bond portfolio manager you are concerned about the impact of changing Interest rates on your portfolio value. Use the information below and excel functions to determine the value of the current bond portfolio, the portfolio yield and the portfolio duration. Assuring that interest rate changes will impact all bonds equally what is the value of the bond portfolio if interest rates increase by 0.25% or 0.5%? From the additional bands provided, which hand, ifadded to the bond portfolio will help insulate the portfolio from interest rate risk? Total Value Portfolio Yield Duration Portfolio Duration Coupons/Year 2 2 Quantity of Bonds in Portfolio 490 340 S&P AA A Issuer Name Walmart Wells Fargo Ford Motors Johnson & Johnson Macys Coupon 7.550% 3.500% 9.950% 6.730% 8.375% Maturity 2/15/30 10/26/29 2/15/32 11/15/23 6/15/25 Yield 1.741% 3.526% 5.744% % 0.411% 3.074% Date 2/23/21 2/23/21 2/23/21 2/23/21 2/23/21 Price Face Value $ 148.08 $ 100.00 $ 99.93 $ 100.00 $ 134.10 $ 100.00 $ 117.12 $ 100.00 $ 110.75 $ 100.00 BB 2 2 2 350 510 805 BB What is the value of the bond portfolio? Answer: What is the portfolio yield? Answer: What is the duration of the bond portfolio? Answer: If interest rates increase by 0.25% what is the value afhand portfolia? Issuer Name Yield Price Total Value Walmart Wells Fargo Ford Motors Johnson & Johnson Macys Answer: If interest rates increase by 0.50% what is the value of bond portfolio? Issuer Name Yield Price Total Value Walmart Wells Fargo Ford Motors Johnson & Johnson Macys Answer: If you wanted to reduce the interest rate sensitivity of your bond portfolio which of the following bonds would you buy? Why? Yield Price Total Value Issuer Name Walmart Wells Fargo Ford Motors Johnson & Johnson Macys Answer: If interest rates increase by 0.50% what is the value of bond portfolio? Issuer Name Yield Price Total Value Walmart Wells Fargo Ford Motors Johnson & Johnson Macys Answer: If you wanted to reduce the interest rate sensitivity of your bond portfolio which of the following bonds would you buy? Why? Issuer Name Coupon Coupons/Year Maturity S&P Yield Date Price Apple 2.400% 5/3/23 AA+ 0.289% 2/23/21 $ 104.60 Intel 4.800% 2 10/1/41 A+ 2.956% 2/23/21 $ 128.30 Caterpillar 2.850% 2 6/1/22 A 0.244% 2/23/21 $ 103.30 N N N

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