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A company has a liability of 50000 to be paid 4 years from now. The company would like to be fully immunized against any change
A company has a liability of 50000 to be paid 4 years from now. The company would like to be fully immunized against any change in yield rate. The only investments available are two-year and five-year zero-coupon bonds. The annual effective yield rate is 3%. If X and Y are the face values of the two-year bond and five-year bond, respectively, compute the difference Y-X.
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