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Now meet another manager, Kai - lan, who sends you into the jungle to meet Diego, the animal rescuer, and his sister, Alicia, the animal
Now meet another manager, Kailan, who sends you into the jungle to meet Diego, the animal rescuer, and his sister, Alicia, the animal scientist. In order to save baby jaguars Go Diego Go Diego and Alicia need US$ million a year at the end of the next two years. The US yield curve is flat at percent and a STRIP is a zerocoupon bond. What is the present value of Diego and Alicias financial need in US$ What maturity US$ STRIP would meet their need? Suppose you bought that US$ STRIP in b for Diego and Alicia. Now suppose that the flat US yield curve immediately increases to percent. What happens to their net position, that is to the difference between the value of the bond and that of the financial need? What if the flat US yield curve falls to percent?
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