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A company must pay liabilities of 2000 at the end of one year and 3000 at the end of two years. The only investments available
A company must pay liabilities of 2000 at the end of one year and 3000 at the end of two years. The only investments available are one-year zero-coupon bond and two-year annual coupon bonds with coupon rate 5% maturing at par. How much of one-year zero-coupon bond (in terms of redemption value) should the company buy in order to exactly match the assets and liabilities
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