Question
A company is attempting to immunize a schedule of liability cash flows via cash flow matching. The cash flows are as follows: Year Liability
A company is attempting to immunize a schedule of liability cash flows via cash flow matching. The cash flows are as follows: Year Liability (000s) 1 126 2 272 3 372 Starting from the end and working forward, the company decides to match the year 3 cash flow by investing in a 3 year 5.13% annual coupon bond, currently priced at 103.78 per $100 of par value. What is the amount of face value of this bond that the company must buy to match the year 3 liability?
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Statistics For Business And Economics
Authors: Paul Newbold, William Carlson, Betty Thorne
8th Edition
0132745658, 978-0132745659
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