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Part A is already correct - please solve part B. You are managing a portfolio of $1.4 million. Your target duration is 10 years, and
Part A is already correct - please solve part B.
You are managing a portfolio of $1.4 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity 5 years, and a perpetuity, each currently yielding 4%. a. How much of each bond will you hold in your portfolio? b. How will these fractions change next year if target duration is now nine yearsStep by Step Solution
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