ge 2: Question 24 (1 point) You work for an insurance company, which expects an obligation of $1,705,000 in 6- years. To ensure the insurance company can cover the obligation, you are told that you should invest in 1000 high-yield 9.3% annual coupon bonds with a 9.3% yield to maturity that matures in 6-years with a duration of 4.86 years. However, you learned in your finance program at Georgia Southern that this is not a good idea and you suggest that it is better to invest in an 8-year bond with the same coupon rate (9.3%) and yield to maturity (9.3%) and a duration of close to 6 years. Calculate the ending wealth ((future value of the bond and coupon payments reinvested) in 6 years of the bond that matures in 6 years if the interest rate would have stayed constant ge 3: age 4: 4 $1,705 "age 5: $705 5 None of the answers is correct Page 6 $2,000 6 $1,682 Question 25 (1 point) You work for an insurance company, which expects an obligation of $1,705,000 in 6- years. To ensure the insurance company can cover the obligation, you are told that you should invest in 1000 high-yield 9.3% annual coupon bonds with a 9.3% yield to maturity that matures in 6-years with a duration of 4.86 years. However, you learned in your finance program at Georgia Southern that this is not a good idea and you suggest that it is better to invest in an 8-year bond with the same coupon rate (9.3%) and yield to maturity (9.3%) and a duration of close to 6 years. Calculate the ending wealth (future value of the bond and coupon payments reinvested) in 6 years of the bond that matures in 6 years if interest rates dropped to 8% $2,000 5: $1,682 None of the answers is correct e 6: $705 $1,705 Question 26 (1 point) You work for an insurance company, which expects an obligation of $1,705,000 in 6- years. To ensure the insurance company can cover the obligation, you are told that you should invest in 1000 high-yield 9.3% annual coupon bonds with a 9.3% yield to maturity that matures in 6-years with a duration of 4.86 years. However, you learned in your finance program at Georgia Southern that this is not a good idea and you suggest that it is better to invest in an 8-year bond with the same coupon rate (9.3%) and yield to maturity (9.3%) and a duration of close to 6 years. Calculate the price in 6 years of the bond that matures in 8 years if interest rates dropped to 8% $1,682 None of the answers is correct $1,000 6: $1,023 $1,045 Question 27 (1 point) You work for an insurance company, which expects an obligation of $1,705,000 in 6- years. To ensure the insurance company can cover the obligation, you are told that you should invest in 1000 high-yield 9.3% annual coupon bonds with a 9.3% yield to maturity that matures in 6-years with a duration of 4.86 years. However, you learned in your finance program at Georgia Southern that this is not a good idea and you suggest that it is better to invest in an 8-year bond with the same coupon rate (9.3%) and yield to maturity (9.3%) and a duration of close to 6 years. The ending wealth in 6 years of the coupon payments of the bond that matures in 8 years if interest rates dropped to 8% $1,000 $705 $682 6: None of the answers is correct $558