Given how sensitive the Sleeping Beauty bonds are to changes in interest rates, we want to hedge against interest rate movements. Suppose you own $100 worth of Sleeping Beauty bonds and there are two other bonds that we can use to hedge interest rate shifts:

2-year zero coupon bond with a 5% yield (semi-annually compounded, so a 2.5% semi-annual yield)

10-year zero coupon bond with a 6% yield (semi-annually compounded, so a 3% semi-annual yield)

1a. What is the overall value of your portfolio (i.e. the portfolio consisting of the Disney bond, and the two- and the ten-year zero-coupon bonds)? Round to the nearest cent.

1b. What is the face value of your positions in the 2-year bond? Round to the nearest cent.

1c. What is the face value of your positions in the 10-year bond? Round to the nearest cent.

1d. Calculate the market value of your portfolio if all (annual) yields increased by three percentage points. Round to the nearest cent.