two fin investment question

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  • A 30 year maturity corporate bond has a 8% coupon rate with coupons paid annually. The bond currently sells for $875.50. A bond market analyst forecasts that in 8 years, yield on such bonds will be at 10%. You believe you will be able to reinvest the coupons earned over the next 8 years at a 5% rate of return. What is your expected annual compound rate of return if your plan on selling the bond in 8 years?
  • To create a portfolio with a duration of 4 years using a 5 year zero coupon bond and a 2 year 6% annual coupon bond with a yield to maturity of 8%, one would have to invest______ of the portfolio value in the zero coupon bond.

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