You are considering a portfolio of bonds issued by Mason Mortgage Corp (MMC). The MMC bonds are expected to pay $1 million in year one, $1 million in year two, $1 million in year three, and $4 million in year four. You estimate the interest rate for the bonds to be around 10%. If you use duration to hedge against the interest rate risk by investing in a 1-yr ZCB and a 3-yr ZCB, both of which have a current market interest rate of 3%, what is your weight in the 1-yr ZCB?

	A.	-1.00%
	B.	101.01%
	C.	99.09%
	D.	-10.10%

You are managing to sell a coupon bond issued by Simpli Data Mining Corp (SDMC). The SDMC bond has a par value of $1 million and a coupon rate of 7%. The coupons are paid semi-annually, and the bond matures in 3 years. The prevailing market interest rate for the bonds with similar risk as SDMC is 9%. If you use duration to hedge against the interest rate risk by investing in cash and a 2-yr ZCB, what is your position in the ZCB?

	A.	Buy $1.30 MM
	B.	Borrow $1.30 MM
	C.	Buy $0.36 MM
	D.	Borrow $0.36 MM