You are advising a family friend who has become a reluctant fixed income fund manager (due to an expanded job description). You have been asked to recommend a bond portfolio that will provide $10 million at the end of 9 years for the lowest price today. The portfolio will consist of two bonds, a 12-year, 10% coupon bond and 25-year, 6% coupon bond, both trading at a YTM of 6%, with a $1,000 face value and paying coupons semi-annually. Assuming that fractional purchases are allowed, how would you advise the fund manager to divide the funds between the two bonds? Show how this immunizes the portfolio on a graph. Assume that the yield curve remains flat (same rate at all maturities) and that interest rates change by up to 4%. The model should show the amount invested in each bond and the portfolio's final value. It should also allow the fund manager to alter the weights of the two bonds to demonstrate the effects of immunization. There should be a way to quickly return to your optimal solution. What does this show about immunization strategies? After one-year, why is the portfolio no longer immunized?