In this problem, use annual compounding An insurance company has the liabilitios with the following payment pattem, each at the end of the respective year: - Year 3: $2.5 million - Year 7: 54.2 million - Year 20: $6.0 million There are no coupon payments or other liabilities to consider. The discount rate for the insurance's liabilities is 3%. The insurance company has the following investment opportunities in bonds and stocks: Coupon Bonds Common Stocks Zero-Coupon Bonds Note: As for bonds, it is possible to compute something like duration for dividend paying stocks. More about that in later classes.) Using the information about the zero-coupon bonds, draw the yield curve and compute two forward rates of your choice. (Note: The forward rate could be for a two-vear hond or, a five-year bond.) In this problem, use annual compounding An insurance company has the liabilitios with the following payment pattem, each at the end of the respective year: - Year 3: $2.5 million - Year 7: 54.2 million - Year 20: $6.0 million There are no coupon payments or other liabilities to consider. The discount rate for the insurance's liabilities is 3%. The insurance company has the following investment opportunities in bonds and stocks: Coupon Bonds Common Stocks Zero-Coupon Bonds Note: As for bonds, it is possible to compute something like duration for dividend paying stocks. More about that in later classes.) Using the information about the zero-coupon bonds, draw the yield curve and compute two forward rates of your choice. (Note: The forward rate could be for a two-vear hond or, a five-year bond.)