Evaluate the three bonds in this document and write 1500 words as follows
1. What is the exact business of DBPF?
2. What is the funding position and why is it important?
3. While I understand what bonds are and why their value depends on interest rates, I do not understand
what DBPF’s obligations towards their policyholders are.
4. I could not follow the computations of the values for the three bonds. Could you please explain it to
me and give me the correct values?
5. I also have no clue about the modified duration. What is it and why is it useful for portfolio risk
management of the DBPF? In particular, are the modified durations of 4.6 for DBPF’s bond portfolio
and of 10.5 for DBPF’s obligations to policyholders of concern and why?
6. Finally, what can be done if the durations are of concern?
the detail is in the file☆
0 comments