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8 . You will be paying $ 2 0 , 0 0 0 a year in tuitio ( a ) What is the modified duration

8. You will be paying $20,000 a year in tuitio
(a) What is the modified duration of your obligation?
(b) To immunize this obligation, you can choose from two bonds: a zero-coupon bond with maturity 10 years and a perpetuity, each currently yielding 5%. Ho
(c) Suppose that 1 year passed, and you pay the first years tuition. What is the duration of your obligation after one year? How the immunized bond portfolio should be rebalanced if the yield of two bond changes to 8%?

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