We discussed in detail bond immunization in the lecture as a strategy to manage the exposure of bond investment to the changes of market interest rates. Suppose a portfolio has an average duration of 15 years. As the portfolio manager, you are looking at 5-year zero-coupon bonds and 4% yield perpetuities to immunize its interest rate risk. What is the percentage of capital to be allocated to the zero-coupon bonds to immunize?

A.

52%

B.

50%

C.

48%

D.

33%

E.

25%