1. Consider two zero coupon bonds with both with $100 face value and the following additional characteristics: Bond Maturity 13 Yield 3% 5% IB a. How many of bond A do you need to long (or short sell) for each of bond that you buy for short sell) to create a fully immunized ($ Duration) portfolio to speculate on the yield curve flattening? Indicate a short sale with a negative sign and round to 3 decimal places. b. What is the value of the fully immunized ($ Duration) portfolio that you would create to speculate on short-term rates increasing relative to longer term rates? c. What is the value of your portfolio from above if the rate on the longer maturity bond falls to 3% (ie the yield curve flattens)? Round your answer to the nearest cent. d. Did you make or lose money on your strategy when the yield curve flattened