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A company is awaiting a courts judgment on how much it must to pay in damages in a product liability case. It expects to have
A company is awaiting a courts judgment on how much it must to pay in damages in a product liability case. It expects to have to pay annual damages to the plaintiffs for the next 20 years. It plans to buy enough Treasury bonds to cover the costs the interest on the bonds will be used to cover the annual payments to the plaintiffs. It is not clear how big the damages will be, but it has been told by the judge that he will rule within 30 days. What is the best way to hedge this potential liability?
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