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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
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=___________%
| Â |
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=___________% |
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