Consider Perpetuity, a bond that pays $1 for good each year. Perpetuity's first $1 payment is known to be one year later. As in class, y represents Yield-to-maturity in Perpetuity, and r1 indicates Yield-to-maturity in a one-year maturity. Present all the elicitation processes for the answers to the following questions. (a) express the price of Perpetuity as y.

(b) Describe the duration of Perpetuity as y.

(c) it is said that an insurance company has a contract that must pay $17715.61 in six years. Because the market interest rate is 10%, the present value of the amount payable in six years is known to be $10,000. The fund management officer of the insurance company intends to use the one-year zero-coupon and the Perpetuity above to prepare the payment in six years. Explain how one-year zero-coupon and Perpetuity above will be used to fund the application of the emmunization technique.