7-C. Calculate the initial net proceeds (in USD) of each of the following methods:
i. mortgage financing
ii. sale and leaseback
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Page 46 Level III
QUESTION 8 HAS THREE PARTS (A, B, C) FOR A TOTAL OF 20 MINUTES.
Sarah Thurman is a portfolio manager at Devon Asset Management. One of Thurman’s clients
has a portfolio valued at USD 150,000,000 that is allocated 75% to equities and 25% to bonds.
She wants to reduce the portfolio’s equity allocation to 50% and raise its bond allocation to 50%.
Thurman wants to simultaneously lower the modified duration of the bond portfolio from 6.05 to
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