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An insurance company will owe $15,826 in 9 years. Market interest rates are 8%. A portfolio manager needs to immunize the obligation, and wants to
An insurance company will owe $15,826 in 9 years. Market interest rates are 8%. A portfolio manager needs to immunize the obligation, and wants to fund it using 4 year zero-coupon bonds and a perpetuity paying annual coupon bonds (at market rate).
What weight should be put into the zero coupon bonds? (Answer in decimal form. Round to 2 decimals)
What dollar amount should be invested in the perpetuity today? (round to 2 decimals)
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