R 29 adjusting duration of a bond portfolio using swap.

CFA Level III Derivatives
#1

Q - Assume that you manage a $100 million bond portfolio with a duration of 1.5 years. You wish to increase the duration of the bond portfolio to 3.5 years by using a swap. Assume the duration of a fixed-rate bond is 75 percent of its maturity.

Would you prefer a four-year swap with quarterly payments or a three-year swap with semiannual payments?

I calculated duration of both the swaps and it is

4 year swap: 2.875

3 year swap: 2.0

In my mind 2.0 + 1.5 = 3.5 (perfactly matches our requirement and we can create swap with exactly matching notional)

But in answer CFAI says its better to use higher duration.

Can someone explain why is it so?

#2

The higher the duration, the lower the notional amount.

#3

another factor - with a lower duration on your swap - you will have to swap the higher Notional amount more number of times before the swaps end.