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A company must pay liabilities of 1,000 due 6 months from now and another 1,000 due one year from now. There are two available investments:
A company must pay liabilities of 1,000 due 6 months from now and another 1,000 due one year from now. There are two available investments: 6-month bond, 1,000 face value with 4% nominal annual coupon rate convertible semi-annually. This bond yields annually 3% converted semi-annually. -year bond, 1,000 face value, 5% nominal annual coupon rate convertible semi annually with a 6% annual yield rate converted semi-annually. Find the amount of each bond to purchase and the total cost of the bonds in order to exactly match the liabilities
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