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A company must pay liabilities of 1000 and 2000 at the end of years 1 and 2 respectively, the only investments available to the company
A company must pay liabilities of 1000 and 2000 at the end of years 1 and 2 respectively, the only investments available to the company are the following 2 zero-coupon bonds:
Maturity(years) | effective annual yield | par |
1 | 10% | 1000 |
2 | 12% | 1000 |
Determine the cost to the compan today to match its liabilities exactly
A. 2007, B 2259, C. 2503, D. 2756, E. 3001
PLease, no excel spreadsheets!
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