You are managing a portfolio of 2 million your target


You are managing a portfolio of $2 million. Your target duration is 15 years, and you can choose from two bonds: a zero-coupon bond with maturity 10 years, and a perpetuity, each currently yielding 10%. 

How much of each bond will you hold in your portfolio?

How will these fractions change next year if target duration is now 14 years.

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Financial Management: You are managing a portfolio of 2 million your target
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