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(4 marks) You are managing a portfolio of 20 million. Your target duration is 6 years, and you can choose from two bonds: a zero-coupon

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(4 marks) You are managing a portfolio of 20 million. Your target duration is 6 years, and you can choose from two bonds: a zero-coupon bond with 3 years of maturity and a perpetuity, each currently yielding 5%. Next year, the target duration is 5 years. What is the portfolio weight invested in the perpetulty? Selected Answer: 3/19 Answers: 16/19 3/19 5/6 1/6 None of the above. C

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