1. Today is 1 January 2018. Jackson who is aged 80 has a portfolio which consists of three different types of financial instruments (henceforth referred to as instrument A, instrument Band instrument C.

• InstrumentAis a zero-coupon bond with a face value of 100. This bond matures at par. The maturity date is 1 July 2023.

• Instrument Bis a Treasury bond with a coupon rate of j2= 3.45% p.a. and face value of 100. This bond matures at par. The maturity date is 1 July 2020.

• Instrument Cis a Treasury bond with a coupon rate ofj2= 2.85% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2021.

  b. Jackson’s portfolio is composed of 250 units of instrumentA, 200 units of instrumentBand 180 units of instrumentC. Jackson decides to sell the whole portfolio today at a sale yield rate ofj2= 4.65% p.a.

  1. Calculate the sale price of one instrument A. Round your answer to four decimal places.

  2. Calculate the sale price of one instrument B. Round your answer to four decimal places.

  3. Calculate the sale price of one instrument C. Round your answer to four decimal places.

  4. Calculate the total sale proceed. Round your answer to two decimal places.

  5. Based on the duration values in part a and the price in part b (i)–(iv), calculate today’s duration of Jackson’s portfolio right before sale. Express your answer in terms of years and round your answer to two decimal places.