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5. Suppose you are an investment manager charged with selecting between two portfolios designed to meet the needs of your client. This client seeks to provide $425,000 dollars each year perpetually to support meeting the needs of people living in Spare Oom. The appropriate discount rate for this set of liabilities is 5.0%. The two portfolios to consider have the following properties Parameters Portfolio 1 Portfolio 2 Portfolio 3 Current annual dividend $157,407,41 $412,621.36 $1,020,000 Portfolio cost of equity capital 10% 8% 12% Portfolio dividend growth rate 8% 3% 0% In developing your decision on which portfolio to recommend be sure to fill in the following table: Liability Portfolio 1 Portfolio 2 Portfolio 3 Parameters Current value Modified duration (k) Convexity (k) Recommended Portfolio: 5. Suppose you are an investment manager charged with selecting between two portfolios designed to meet the needs of your client. This client seeks to provide $425,000 dollars each year perpetually to support meeting the needs of people living in Spare Oom. The appropriate discount rate for this set of liabilities is 5.0%. The two portfolios to consider have the following properties Parameters Portfolio 1 Portfolio 2 Portfolio 3 Current annual dividend $157,407,41 $412,621.36 $1,020,000 Portfolio cost of equity capital 10% 8% 12% Portfolio dividend growth rate 8% 3% 0% In developing your decision on which portfolio to recommend be sure to fill in the following table: Liability Portfolio 1 Portfolio 2 Portfolio 3 Parameters Current value Modified duration (k) Convexity (k) Recommended Portfolio

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