You are managing a portfolio of $1.3 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity 5 years, and a perpetuity, each currently yielding 8%.

You are managing a portfolio of $1.3 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity 5 years, and a perpetuity, each currently yielding 8%. a. How much of each bond will you hold in your portfolio? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Zero-coupon bond % Perpetuity bond % b. How will these fractions change next year if target duration is now twelve years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Zero-coupon bond % Perpetuity bond %