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Business, 25.11.2019 20:31 22mhenton

You are managing a portfolio of $1.0 million. your target duration is 19 years, and you can choose from two bonds: a zero-coupon bond with maturity five years, and a perpetuity, each currently yielding 2%. (a) how much of (i) the zero-coupon bond and (ii) the perpetuity will you hold in your portfolio? (do not round intermediate calculations. round your answers to 2 decimal places.)
(b) how will these fractions change next year if the target duration is now eighteen years? (do not round intermediate calculations. round your answers to 2 decimal places.)

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