A financial institution has an investment horizon of 2 years, 9.5 months. The institution has converted all assets into a portfolio of 8 percent, $1,000, 3-year bonds that are trading at a YTM of 10 percent. The bonds pay interest annually. The portfolio manager believes that the assets are immunized against interest rate changes. a. Is the portfolio immunized at the time of bond purchase? What is the duration of the bonds?

b. Will the portfolio be immunized one year later? After one year, the investment horizon will be 1 year, 9.5 months. At this time, the bonds will have a duration of 1.9247 years, or 1 year, 11+ months. Thus the bonds will no longer be immunized

c. Assume that one-year, 8 percent zero-coupon bonds are available in one year. What proportion of the original portfolio should be placed in zeros to rebalance the portfolio? Please solve the problem without excel and solve the question by giving a clear explanation of each formula.