An insurance company must make payments to a customer of $1 million in one year and $400,000 in four years. The yield curve is flat at 10%. Use annual compounding. If the company wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what must be the market value of the zero-coupon bond?

a. $1.18 million

b. $2.35 million

c. $5.78 million

An insurance company must make payments to a customer of $1 million in one year and $400,000 in four years. The yield curve is flat at 10%. Use annual compounding. If the company wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase?

a.

2.86

b.

1.69

c.

2.37

d.

1.96

d. $4.57 million

Can you please answer BOTH questions, both are built on each other.