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A company is required to pay 190,000 in 20.5 years. The company creates an investment portfolio using three bonds with annual coupons, so that
A company is required to pay 190,000 in 20.5 years. The company creates an investment portfolio using three bonds with annual coupons, so that its position is Redington immunized based on an annual effective interest rate of 7%. The table below shows the Macaulay duration for each of the bonds. Macaulay Duration Bond A 10 years Bond B 15 years Bond C 30 years The company invests twice as much money in Bond C as in Bond B. Calculate the amount the company invests in Bond A. A 6,640 B 8,630 C 11,075 D 13,308 LLI E 14,240
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