7.2.1 Liabilities of 1 each are due at the ends of periods 1 and 2. There are three securities available to produce asset income to cover these liabilities, as follows: (i) A bond due at the end of period 1 with coupon at rate 1% per period, valued at a periodic yield of 14%; shnod n (ii) A bond due at the end of period 2 with coupon rate 2% per period, valued at a periodic yield of 15%; mit al vlovi... (iii) A bond due at the end of period 2 with coupon rate 20% per period, valued at a periodic yield of 14.95%. 15706 501 DO Determine the cost of the portfolio that exactly matches asset income to liabilities due using 21-0 (a) bonds (i) and (ii) only. (b) bonds (i) and (iii) only (c) Show that the combination of securities in (b) minimizes the cost of all exact-matching portfolios made up of a combination of the three securities. Note that the minimum cost exact- matching portfolio does not use the highest yielding security in this case. 02121= () ()