Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I know the answer is C i just dont know how, please show work 190. SOA Life Insurance Life Insurance Company has a portfolio of

image text in transcribed

I know the answer is C i just dont know how, please show work

190. SOA Life Insurance Life Insurance Company has a portfolio of two bonds: .Bond 1 is a bond with a Macaulay duration of 7.28 and a price of 35,000; and .Bond 2 is a bond with a Macaulay duration of 12.74 and a price of 65,000. The price and Macaulay duration for both bonds were calculated using an annual effective interest rate of 4.32% Bailey estimates the value of this portfolio at an interest rate of i using the first-order Macaulay approximation to be 105,000. Determine i. A. 3.49% B. 3.62% C. D. 3.92% E. 3.85% 4,03%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Regulation In The EU From Resilience To Growth

Authors: Raphaël Douady , Clément Goulet, Pierre-Charles Pradier

1st Edition

3319442864,3319442872

More Books

Students also viewed these Finance questions