You are worried about interest rate volatility. You decide to hedge your portfolio with a 3-year coupon

Question:

You are worried about interest rate volatility. You decide to hedge your with a 3-year bond paying 4% on a semiannual basis.
(a) How much should you go short/long on this bond in order to make it immune to interest rate changes?
(b) What is the total value of the now?
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...