You are managing a portfolio of $2.3 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity 8 years, and a perpetuity, each currently yielding 8%.

a)How much of each bond will you hold in your portfolio? whatis the zero coupon bond and perpetuity bond

b)How will these fractions change next year if target duration is now nine years? what is the zero coupon bound and perpetuity bond