b. Tony, a fixed-income portfolio manager, is managing a portfolio of $10 million. His target duration...

b. Tony, a fixed-income portfolio manager, is managing a portfolio of $10 million. His target duration is 7 years, and he can choose from two bonds: a zero-coupon bond with maturity of 3 years, and a perpetuity, each currently yielding 8%.

i. What is the weighting of each bond will Tony hold in his portfolio?

ii. Suppose that a year has passed and the yield has fallen to 6%. What will these weightings be if target duration is now 6 years?

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b. Tony, a fixed-income portfolio manager, is managing a portfolio of $10 million. His target duration...

b. Tony, a fixed-income portfolio manager, is managing a portfolio of $10 million. His target duration is 7 years, and he can choose from two bonds: a zero-coupon bond with maturity of 3 years, and a perpetuity, each currently yielding 8%. i. What is the weighting of each bond will Tony hold in his portfolio? ii. Suppose that a year has passed and the yield has fallen to 6%. What will these weightings be if target duration is now 6...

Tony, a fixed-income portfolio manager, is managing a portfolio of $10 million. His target duration is...

Tony, a fixed-income portfolio manager, is managing a portfolio of $10 million. His target duration is 7 years, and he can choose from two bonds: a zero-coupon bond with maturity of 3 years, and a perpetuity, each currently yielding 8%. i. What is the weighting of each bond will Tony hold in his portfolio? ii. Suppose that a year has passed and the yield has fallen to 6%. What will these weightings be if target duration is now 6 years?

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b. Tony, a fixed-income portfolio manager, is managing a portfolio of $10 million. His target duration...

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