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nds: a zero-coupon bond with a maturity of six years, and a perpetual b 8%. How many percent of your portfolio should invest in the perpetual bon

nds: a zero-coupon bond with a maturity of six years, and a perpetual b 8%. How many percent of your portfolio should invest in the perpetual bon

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You are managing a portfolio of $1 million. Your target duration is 9 years, and you can choose from two bonds: a zero-coupon bond with a maturity of six years, and a perpetual bond, each currently yielding 8%. How many percent of your portfolio should invest in the perpetual bond?
Transcribed Image Text:You are managing a portfolio of $1 million. Your target duration is 9 years, and you can choose from two bonds: a zero-coupon bond with a maturity of six years, and a perpetual bond, each currently yielding 8%. How many percent of your portfolio should invest in the perpetual bond?
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