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You are managing a portfolio of $1.2 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity 7 years, and a perpetuity, each currently yielding 10%. a. How much of each bond will you hold in your portfolio? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Zero-coupon bond % Perpetuity bond % b. How will these fractions change next year if target duration is now nine years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Zero-coupon bond % Perpetuity bond %

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Financial Management, Finance

Category:- Financial Management
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