QUESTION 3 Suppose that you have decided to fund a three-year liability (no interest payments) with a portfolio consisting of positions in a two-year zero-coupon bond (2YR) and a four-year zero-coupon bond (4YR). The current interest rate level is 10%. What is the price of each bond? Round your answer to the nearest cent: QUESTION 4 10 points Save Answe Since our liability is a three-year liability, we want to immunize our portfolio by duration matching. Set up the portfolio, describing how many of the the 2YR and the 4YR bond you have to buy to match the duration of your three-year liability. Assume that the liability has a present value of $5,000 and that you can buy fractional bonds. QUESTION 5 20 points Save Insert a math equation - MathType Just after your purchase, interest rates drop to 8%. What is the new duration of your portfolio? And how would you have to rebalance your portfolio to immunize your liability again? QUESTION 3 Suppose that you have decided to fund a three-year liability (no interest payments) with a portfolio consisting of positions in a two-year zero-coupon bond (2YR) and a four-year zero-coupon bond (4YR). The current interest rate level is 10%. What is the price of each bond? Round your answer to the nearest cent: QUESTION 4 10 points Save Answe Since our liability is a three-year liability, we want to immunize our portfolio by duration matching. Set up the portfolio, describing how many of the the 2YR and the 4YR bond you have to buy to match the duration of your three-year liability. Assume that the liability has a present value of $5,000 and that you can buy fractional bonds. QUESTION 5 20 points Save Insert a math equation - MathType Just after your purchase, interest rates drop to 8%. What is the new duration of your portfolio? And how would you have to rebalance your portfolio to immunize your liability again