The term structure of interest rates is currently flat r = 10%. You own a portfolio of bonds as follows:

500 bonds, each with a 9.5% coupon maturing in 7 years,

1200 bonds, each with a 6% coupon maturing in 4 years.

You wish to hedge against losses due to interest rate changes by taking a position in 7 year discount bonds. What must the value of your position be? After 4 years (when the 6% bonds have matured), how would you expect this position to have changed assuming rates remain constant up to and including that time period?