An insurance company must make payments to a customer of $11 million in one vear and $5 milition in five years. The yleld curve is

Question

31 users unlocked this solution today!

An insurance company must make payments to a customer of $11 million in one vear and $5 milition in five years. The yleld curve is flat at 6%. Required: o. If it wants to fully fund and immunlze its obligation to this customer with a single issue of a rero coupon bond, what maturity bond must it purchase? Note: Do not round intermediate colculations. Round your onswer to 2 decimol places. b. What must be the face value and maiket value of that zero-coupon bond? Note: Do not round intermediate coleulations. Enter your onswers in millions rounded to 2 decimal places