You are managing a portfolio of $1.5 million. Your target duration is 12 years, and you can choose from two bonds: a zero-coupon bond with maturity 10 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 changenextyearif target duration is now eleven years?(Do not round intermediate calculations.Round your answers to 2 decimal places.)

Zero-coupon bond: ________%

Perpetuity bond: ________%