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A court has ordered Security Enterprises to pay $ 3 0 0 , 0 0 0 in two years and $ 9 0 0 ,
A court has ordered Security Enterprises to pay $ in two years and $ in five years. In order to meet this important liability, they wish to invest in a combination of twoyear parvalue bonds with annual coupons and fiveyear zerocoupon bonds. Each of these is sold to yield an annual effective yield of 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 rate? Let P and P denote the prices of the twoyear bond and of the fiveyear bond, respectively. Round your answers to the nearest cent.
A court has ordered Security Enterprises to pay $ in two years and $ in five years. In order to meet this important liability, they wish to invest in a combination of twoyear parvalue bonds with annual coupons and fiveyear zerocoupon bonds. Each of these is sold to yield an annual effective yield of 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 rate? Let P and P denote the prices of the twoyear bond and of the fiveyear bond, respectively. Round your answers to the nearest cent.
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