You are managing a portfolio of $2.9 million. Your target duration is 14 years, and you can choose from two bonds: a zero-coupon bond with maturity 5 years, and a perpetuity, each currently yielding 5%.

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 thirteen years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) zero- coupon bond=__________% perpetuity bond=___________%