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A pension plan is obligated to make disbursements of 2,000,000, 4,000,000, and 7,000,000 at the end of each the next three years. The interest rate
A pension plan is obligated to make disbursements of 2,000,000, 4,000,000, and 7,000,000 at the end of each the next three years. The interest rate is 5% annually. To fully fund its position, the plan has access to only two assets: 2-year 0 coupon bonds and perpetuities. To immunize the plan, what percentage of the portfolio must be in zeros?
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