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please show calculations (6 points) You are given: Morgan's company is committed to making a payment of $400,000 in 7 years and a second payment
please show calculations
(6 points) You are given: Morgan's company is committed to making a payment of $400,000 in 7 years and a second payment of $2,000,000 in 12 years. The only assets that are available to back the liabilities are 2-year zero-coupon bonds and 15-year zero-coupon bonds. The effective annual interest rate is 4.5% for both assets and liabilities. a) Determine how much should be invested in each of the assets to satisfy the present value and duration conditions required for immunization. b) Given the Macaulay convexity of the liability payments is 125.05, is the convexity condition for immunization satisfied? Show why or why notStep by Step Solution
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