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An insurance company is obligated to pay a policyholder $500 in one year and $2,000 in 3 years. The insurance company has decided to employ
An insurance company is obligated to pay a policyholder $500 in one year and $2,000 in 3 years. The insurance company has decided to employ the dedication strategy. The following assets are available: i. 1 year zero coupon bond with annual effective yield of 7%. ii. 3 year zero coupon bond with annual effective yield of 8%. Determine the cost of establishing the asset portfolio. 2,050 2,055 2,060 2,065 2,070
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