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A bond fund manager currently holds a 7-year Treasury position with USD 60 million face...

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A bond fund manager currently holds a 7-year Treasury position with USD 60 million face value. The manager is looking to create a cost matching barbell portfolio by purchasing two bonds: a 2-year Treasury and a 15-year Treasury which would have the same duration as the 7-year Treasury position. The data for the Treasures are listed as follows: Maturity Price Duration 2 Years 100.972 1938 7 Years 106.443 6.272 15 Years 122.175 11.687 Which of the following combinations correctly describes the weights of the two bonds that the manager will use to construct the barbell portfolio? Weight of 2.Year Treasury Weight of 15-Year Treasury A 14 22% 85.789 44.46% 55.54% 55.54% 44.46% D. 85 78% 14.22% 8. %

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