Question
A pension fund is projecting the following obligations: year1: 7.2m; year 2: 0.8m; year 3: 6.7m The fund would like to finance this obligation by
A pension fund is projecting the following obligations: year1: 7.2m; year 2: 0.8m; year 3: 6.7m
The fund would like to finance this obligation by investing in a zero-coupon bond. What should be the maturity of the zero-coupon in order to immunize against interest rate movements, if the YTM for both obligations and investments is 7%?
Provide your answer in years rounded to two decimals.
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Business Analysis And Valuation Using Financial Statements Text And Cases
Authors: Krishna G. Palepu, Paul M. Healy, Victor Lewis Bernard, W.Gordon Filby
2nd Edition
0324015658, 9780324015652
