How much of each bond will you hold in portfolio

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Reference no: EM132034625

You are managing a portfolio of $2.9 million. Your target duration is 14 years, and you can choose from two bonds: a zero-coupon bond with maturity 5 years, and a perpetuity, each currently yielding 5%. a. How much of each bond will you hold in your portfolio? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Zero-coupon bond 12.69 % Perpetuity bond 16.31 % b. How will these fractions change next year if target duration is now thirteen years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Zero-coupon bond % Perpetuity bond %

Reference no: EM132034625

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