Home / Questions / You are managing a portfolio of $1 million Your target duration is 10 years and you can ch...
You are managing a portfolio of $1 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity 5 years, and a perpetuity, each currently yielding 5%.
How much of each bond will you hold in your portfolio?
How will these fractions change next year if target duration is now nine years?
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