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Assume liabilities of $250, $500, and $550 must be met in periods 1, 2, and 3, respectively. Find a portfolio of the bonds shown below
Assume liabilities of $250, $500, and $550 must be met in periods 1, 2, and 3, respectively. Find a portfolio of the bonds shown below that meets these cash outflows. Which portfolio of bonds would meet the mentioned cash outflows (note that the percentages below represent a fraction of each bond and that their sums will not necessarily equal 1)?
Cash Flows in Period | ||||
Bond | Price | 1 | 2 | 3 |
A | 950 | 50 | 1050 | |
B | 1000 | 100 | 100 | 1100 |
C | 920 | 1000 |
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