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A company has to pay three liabilities of 100 each to be paid at times 2, 4, and 6. The company plans to meet the
A company has to pay three liabilities of 100 each to be paid at times 2, 4, and 6. The company plans to meet the obligation with an investment program that produces asset cash flows of A1 at time 1 and A5 at time 5. The effective rate of interest is 10%. Determine A1 and A5 such that this investment program satisfies the conditions for Redington immunisation.
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