Given how sensitive the Sleeping Beauty bonds are to changes in interest rates, we want to hedge against interest rate movements. Suppose you own $100 worth of Sleeping Beauty bonds and there are two other bonds that we can use to hedge interest rate shifts:

2-year zero coupon bond with a 5% yield (semi-annually compounded, so a 2.5% semi-annual yield)

10-year zero coupon bond with a 6% yield (semi-annually compounded, so a 3% semi-annual yield)

1. Calculate how much in dollar value you would buy/short in the 2-year and 10-year bonds to hedge the interest rate sensitivity of the Sleeping Beauty bond. If your hedge requires a short position in one of the bonds, use a minus sign. Round to the nearest cent. For a long position, simply enter the dollar amount.