A Firm entered an agreement that has a current value of $6.5m that has a duration of 5 years. The Firm wants to immunize the agreement by using a combination of 7-year zero-coupon bonds together with a 3-year, 9% coupon bond with a current yield-to-maturity of 10%.

A) what percent of zero-coupon and 3-year bond is needed for the portfolio?

B) what would be the market value of each of your zero-coupon and 3-year bond investments?