Suppose in the grad school question (two above), the tuition obligations have a Macaulay duration of 6.71 in years and a present value of 45,509. In order to immunize the tuition payments by investing in some combination of two bonds with duration 3.45 and 8.48, what is the dollar amount that you should invest in the bond with duration 8.48? Assume annual compounding. Round your answer to 2 decimal places.

Suppose in the grad school question (two above), the tuition obligations have a Macaulay duration of 6.71 in years and a present value of 45,509. In order to immunize the tuition payments by investing in some combination of two bonds with duration 3.45 and 8.48, what is the dollar amount that you should invest in the bond with duration 8.48? Assume annual compounding. Round your answer to 2 decimal places.

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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