Part II (15\% each). Please show all your work. 1. You are a pension fund manager with two investments in your portfolio currently with a total market value of $10 mil. The current market interest rates on both investments are 8%. You have a 10-year zero coupon bond with 6 years to mature currently worth $4mil. You also own a 4-year 11% annual coupon bond with 5 years to mature worth $6 mil currently with a duration of 4.5 years. If the market interest rates were to increase by 10 basis point tomorrow, what is your total portfolio gains/loss? 2. You have 5000 shares of stock currently priced at $40 per share ready to be sold in January for tax reason. To hedge for downside risk, you want to enter into a