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You are managing a portfolio of $1.9 million. Your target duration is 13 years, and you can choose from two bonds:
You are managing a portfolio of $1.9 million. Your target duration is 13 years, and you can choose from two bonds: a zero-coupon bond with maturity 6 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