1. ( $:5 5 ) You manage a pension fund for a major corporation . All the assets of the pension fund are in market able financial securities with a current total value of $ 1 10 ( million ) . You hired an actuary to project the future benefits that the fund is obligated to pay . While no one is retiring in the next year , after that time there will be an increasing* number of retirements reflecting the demographics of the work force . The projected liabilities are :" Years till Liability* Payment.\\ ( millions ) 20 _ WONOH 45 80 You have decided to rearrange the assets of the fund so as to minimize the chances that the value of the assets are not sufficient to meet the liabilities . After considering* the alternatives , you decide to develop a dedicated portfolio to perfectly immunize* the fund . A dedicated portfolio is one where the future cash flows of the liabilities match the future cash flows of the assets . ( The match is in terms of the dollar amount of the flows as well as the timing of the flows . ) Part a . In this part , you are to setup a dedicated portfolio strategy involving zero coupon bonds . To the extent that the value of the assets exceeds the liabilities , you may place this surplus in the stock market . The current prices of zeros with face* value of $ 1 follow :"