1. Find the duration of a bond which pays annual coupons of size 10 at end of year 1 and year 2 and is redeemable for 100 at end of 2 years. Use i = .05.

2. An insurance company accepts an obligation to pay 10,000 at the end of each year for 2 years. The insurance company purchases a combination of the following two bonds (both with $1,000 par and redemption values) in order to exactly match its obligation: Bond A: A 1-year 5% annual coupon bond with a yield rate of 6%. Bond B: A 2-year 8% annual coupon bond with a yield rate of 7%. Find the numbers (which need not be integers) of each bond the insurer must purchase to exactly match its obligations.