A company has a liability with a present value of 100 million and a duration of 12 years. It wants to invest it in a matching bond portfolio with the same present value. It is contemplating using 2 bonds that have the following characteristics: Bond Maturity (years) A B 10 18 Price ($) 97.30 85.86 Coupon (annual) 4% 3% Duration (years) 8 13 (1)What is the nominal value of the bonds that should be bought? And what would the annual coupon income of the portfolio be? (II)Suppose there was a small change in the shape of the yield curve, where the yield on the 10-year bond fell by 10 basis points. What will be the change in the value of the hedged liability?