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A company must pay liabilities of 2000 and 4000 at the end of years 2 and 4, respectively. The only investments available to the company

A company must pay liabilities of 2000 and 4000 at the end of years 2 and 4, respectively. The only investments available to the company are the following two zero-coupon bonds:

Maturity (years)

Eff. annual yield

Par

2

5%

1,000

4

6%

1,000

What is the cost of exactly matching those liabilities.

Select one:

a. $4,632.58

b. $4,982.43

c. $4,307.62

d.

$5,228.73

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