You are managing a portfolio of $2 million. Your target duration is 13.5 years, and you choose to invest in a combination of a zero coupon bond with maturity six years and a perpetuity, each currently yielding 5%. In exactly one year, your target duration will be 12.5 years. At that time, if the yields on the zero coupon bond and the perpetuity do not change, the investment amounts in your portfolio should be:

1. $984,375 and $1,115,625
2. $937,500 and $1,062,500
3. $1,062,500 and $937,500
4. $1,115,625 and $984,375