A firm has an expected liability due in $6$ years of $347$ million dollars. The company's portfolio manager observes that in the current market conditions, the company can immunize this liability with a portfolio generating $4\mathrm{.}6\%$ rate of return, on a bond equivalent basis with semiannual compounding.

If the company can currently commit $$294$ million to support this liability, what is the dollar safety margin?

Enter answer in millions.

You Answered

$39,237,942\mathrm{.}523$

Correct Answer

$29\mathrm{.}87$ margin of error $+/-1\%$

Find how much you must invest today at the available immunization rate to guarantee the required future value. Any extra funds in the available pool on to of that are the safety margin.