Dear tutor,

Grateful for your help solving end of chapter questions as in the attached files.

Q8 - You are managing a portfolio of $1 million. Your target duration is 10 years, and you can invest in two bonds, a zero-coupon bond with maturity of ve years and a perpetuity, each currently yielding 5.8%. a. What weight of each bond will you hold to immunize your portfolio? (Round your answers to 2 decimal places.) Zero-coupon bond _ b. How will these weights change next year if the target duration is now nine years? (Round your answers to 2 decimal places.) Zero-coupon bond % Perpetuity bond % Q9 An insurance company must make payments to a customer of $11 million in one year and $7 million in ve years. The yield curve is at at 6%. a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? (Do not round intermediate calculations. Round your answer to 4 decimal places.) Maturity of zero coupon bond - b. What must be the face value and market value of that zero-coupon bond? (Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places.) Face value million Market value million