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A pension fund has the following obligations: $3.2 Million in one year, $1.8Million in two years, $2.0 Million in three years, and $2.3 Million in
A pension fund has the following obligations: $3.2 Million in one year, $1.8Million in two years, $2.0 Million in three years, and $2.3 Million in four years. If the appropriate interest rate for the risks involved is 8%, how much of its portfolio should it allocate to 2-year Zero Coupon Bonds, if these Bonds and Perpetuities were the only assets funding the plan?
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