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you are managing a portfolio of $1 million your target duration is 10 years, and you can chose from two bonds: a zero coupon bond
you are managing a portfolio of $1 million your target duration is 10 years, and you can chose from two bonds: a zero coupon bond with maturity 6 years and a perpetuity, each currently yielding 4%.
a how much of each will you hold in your portfolio?
how would these change next year if tarvet duration is now 9 years?
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