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You are managing a portiolio of $1 milion. Yout target duration is 10 years, and you can invest
in two bonds, a zero.coupon bond with maturity of five years and a perpetuity, each currently
yielding 5.8%. a. What weight of each bond will you hold to immunize your portfolio? (Round
your onswers to 2 decimal places.) b. How wu thene weights chonge next year if target duration
is now inine years? (Round your answers to 2 decimal ploces.)

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You are managing a portiolio of $1 milion. Yout target duration i.pdf

  • 1. You are managing a portiolio of $1 milion. Yout target duration is 10 years, and you can invest in two bonds, a zero.coupon bond with maturity of five years and a perpetuity, each currently yielding 5.8%. a. What weight of each bond will you hold to immunize your portfolio? (Round your onswers to 2 decimal places.) b. How wu thene weights chonge next year if target duration is now inine years? (Round your answers to 2 decimal ploces.)