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What should be weight of the zero-coupon bond in portfolio

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Reference no: EM132873137

Question 1: You are managing a portfolio of $10 million with 2 bonds: a zero-coupon bond with a maturity of 12 years, and perpetuity, each yielding 4%. What should be the weight of the zero-coupon bond in your portfolio if your target duration is 16 years?

a. 31.25%
b. 50%
c. 62.5%
d. 71.43%
e. none of the above choices are correct.

Reference no: EM132873137

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