Liberty Moose Drool Insurance (LMDI) issues a guaranteed investment contract (GIC) for $1,500,000. If the GIC has a 6-year maturity and a guaranteed interest rate of 5.5% APR (semiannual compounding), the insurance company is obligated to pay the following in 6 years: $1,500,000 (1.0275)12 = $2,077,175.66 Suppose LMDI chooses to fund its obligation with $1,500,000 of 5.5% APR semiannual coupon bonds, selling at par value, with 6 years to maturity. As long as the market interest rate stays at 5.5% (i.e., YTM on 6-year bond stays at 5.5%), the company has fully funded the obligation. a. Calculate the time-6 value of the investment if the YTM remains at 5.5%. b. Calculate the time-6 value of the investment if the YTM falls to 5.0%. c. Calculate the time-6 value of the investment if the YTM rises to 6.0%. Perhaps LMDI should consider an immunized bond portfolio (Z) by finding a combination of available bonds such that the portfolios duration is equal to 6. Assume the following bonds are available: Bond X: T = 4 years, semiannual coupons, 5.5% coupon rate, selling at par. Bond Y: T = 9 years, semiannual coupons, 5.5% coupon rate, selling at par. Note that the 4-year bond will mature before the 6-year horizon. d. Solve for the dollar investment in Bond X and Bond Y for portfolio Z to be immunized. e. Confirm that if interest rates (YTMs) remain the same, then Z will satisfy the obligation. f. Calculate the time-6 value of Z if interest rates fall to 5.0%. g. Calculate the time-6 value of Z if interest rates rise to 6.0%.