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Question
An institutional investor will have to pay off a maturing bond issue in 3 years. The institution has 10,000 bonds outstanding, each with a $1,000 par value. The institutional money manager is reevaluating the fund's total portfolio of $100 million at this time. She is bullish on stocks and wants to put the most she can into the stock market, but she cannot risk being unable to pay off the bonds. Three-year zero-coupon bonds are available paying 6% interest. What percentage of the total $100 million portfolio can she put in stocks and still ensure meeting the bond payments?
A. 87.4%
B. 88.5%
C. 90%
D. 91.6%
Answer
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Related questions
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B. A price-weighted index
C. A value-weighted index
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Q:
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Q:
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Q:
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D. The answer cannot be determined from the information given.