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A court has ordered Security Enterprises to pay 200000 in two years and 500000 in five years. In order to meet this important liability, they

A court has ordered Security Enterprises to pay 200000 in two years and 500000 in five years. In order to meet this important liability, they wish to invest in a combination of two-year 10% par-value bonds with annual coupons and five-year zero-coupon bonds. Each of these is sold to yield an annual effective yield of 4%. how much of each type of bond should be purchased so that the present value and duration conditions of Redington immunization are satisfied at the current 4% rate? what is the face value of the 2 year bond purchased? 5 year bond? Answers: 2 year= $179,736.12, FV= $161,463.94 5 year= $416,138.68,

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