You are managing a portfolio of $1 million. Your target duration is 10 years, and you...
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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 five years and a perpetuity, each currently yielding 5.5%. Required: a. What weight of each bond will you hold to immunize your portfolio? b. How will these weights change next year if target duration is now nine years? Complete this question by entering your answers in the tabs below. Required A Required B What weight of each bond will you hold to immunize your portfolio? Note: Round your answers to 2 decimal places. Zero-coupon bond Perpetuity bond % % 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 five years and a perpetuity, each currently yielding 5.5%. Required: a. What weight of each bond will you hold to immunize your portfolio? b. How will these weights change next year if target duration is now nine years? Complete this question by entering your answers in the tabs below. Required A Required B What weight of each bond will you hold to immunize your portfolio? Note: Round your answers to 2 decimal places. Zero-coupon bond Perpetuity bond % %
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