Answer all questions in this section
Using the resources available in your domestic investment environment select any 4 bonds issued by Government and corporations relevant to you.
a). Determine the current yield and yield-to-maturity for each bond.
b). Evaluate the investment implications of yield curves.
c). Explain factors that affect the price, yield or duration of fixed income securities.
You are a portfolio manager for Jane and John:
(i) Jane, age 37, has £40,000 to invest in a fixed-income security. She has invested in various types of bonds for 10 years, she considers herself to be an aggressive investor, and she is in the 28% marginal income tax bracket. Her primary goal is capital appreciation; income is a secondary consideration.
(ii) John, age 65, is retiring and has £150,000 to invest. He is interested in purchasing fixed-income securities to provide for his income needs during retirement. John will not have any other substantial income, and he will be in the 15% marginal income tax bracket. He has invested in bonds in the past, and he plans to be actively involved in this investment.
