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Hi can you please help me solve this question. You are managing a portfolio of $1.5 million. Your target duration is 11 years, and you

Hi can you please help me solve this question. You are managing a portfolio of $1.5 million. Your target duration is 11 years, and you can choose from two bonds: a zero-coupon bond with maturity of 2 years, and a perpetuity, each currently yielding 12.0%. Please show work

a.

What weight of each bond will you hold to immunize your portfolio?

Zero Coupon Bond _

Perpetuity bond _

b.

How will these weights change next year if target duration is now 4 years?

Zero Coupon Bond _

Perpetuity Bond_

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