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2. A company must make a payment of 12 million to its customer in one year and another 5 million in five years. The market
2. A company must make a payment of 12 million to its customer in one year and another 5 million in five years. The market interest rate is 8%. (i). If the company wants to fully fund and immunize its obligation to the customer with a single issue of a zero-coupon bond, what maturity bond must the company purchase? (ii). Determine also the face value and market value of that zerocoupon bond.
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