Check my work 8 10 points Skipped My pension plan will pay me $12,500 once a year for a 10-year period. The first payment will come in exactly five years. The pension fund wants to immunize its position. Required: a. What is the duration of its obligation to me? The current interest rate is 7.0% per year. b. If the plan uses 5-year and 20-year zero-coupon bonds to construct the immunized position, how much money ought to be placed in each bond? c. What will be the face value of the holdings in each zero? eBook Complete this question by entering your answers in the tabs below. Print Required A Required B Required C What is the duration of its obligation to me? The current interest rate is 7% per year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. References Duration years Required A Required B >
Check my work 8 10 points Skipped My pension plan will pay me $12,500 once a year for a 10-year period. The first payment will come in exactly five years. The pension fund wants to immunize its position. Required: a. What is the duration of its obligation to me? The current interest rate is 7.0% per year. b. If the plan uses 5-year and 20-year zero-coupon bonds to construct the immunized position, how much money ought to be placed in each bond? c. What will be the face value of the holdings in each zero? eBook Complete this question by entering your answers in the tabs below. Print Required A Required B Required C What is the duration of its obligation to me? The current interest rate is 7% per year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. References Duration years Required A Required B >
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
Related questions
Question
Transcribed Image Text:Check my work
8
10
points
Skipped
My pension plan will pay me $12,500 once a year for a 10-year period. The first payment will come in exactly five years. The
pension fund wants to immunize its position.
Required:
a. What is the duration of its obligation to me? The current interest rate is 7.0% per year.
b. If the plan uses 5-year and 20-year zero-coupon bonds to construct the immunized position, how much money ought to be
placed in each bond?
c. What will be the face value of the holdings in each zero?
eBook
Complete this question by entering your answers in the tabs below.
Print
Required A Required B
Required C
What is the duration of its obligation to me? The current interest rate is 7% per year.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
References
Duration
years
Required A
Required B >
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