Required: A pension plan is obligated to make disbursements of $3.0 million, $3.8 million, and $3.0 million at the end of each of the next three years, respectively. The annual Interest rate is 9%. If the plan wants to fully fund and Immunize its position, how much of its portfollo should it allocate to one-year zero-coupon bonds and perpetuities, respectively, if these are the only two assets funding the plan? (Do not round Intermediate calculations. Round your answers to 2 decimal places.) Investment in one-year zero-coupon bonds Investment in perpetuity Portfolio % %
Required: A pension plan is obligated to make disbursements of $3.0 million, $3.8 million, and $3.0 million at the end of each of the next three years, respectively. The annual Interest rate is 9%. If the plan wants to fully fund and Immunize its position, how much of its portfollo should it allocate to one-year zero-coupon bonds and perpetuities, respectively, if these are the only two assets funding the plan? (Do not round Intermediate calculations. Round your answers to 2 decimal places.) Investment in one-year zero-coupon bonds Investment in perpetuity Portfolio % %
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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Transcribed Image Text:Required:
A pension plan is obligated to make disbursements of $3.0 million, $3.8 million, and $3.0 million at the end of each of the next three
years, respectively. The annual Interest rate is 9%. If the plan wants to fully fund and Immunize its position, how much of its portfollo
should it allocate to one-year zero-coupon bonds and perpetuities, respectively, if these are the only two assets funding the plan? (Do
not round Intermediate calculations. Round your answers to 2 decimal places.)
Investment in one-year zero-coupon bonds
Investment in perpetuity
Portfolio
%
%
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