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Prudential Insurance Company must pay you $50,000 once a year for a 2-year period. The first payment will be made in exactly 5 years. The

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Prudential Insurance Company must pay you $50,000 once a year for a 2-year period. The first payment will be made in exactly 5 years. The yield curve is flat at 10%. What is the present value and duration of Prudential's obligation to you? (Hpoints) a. b. There are currently 2-year zero-coupon bonds and perpetuities sold in the market. How much of each of 2-year zeros and perpetuities (in present value) will Prudential want to hold to both fully fund and immunize your obligation? (6 points) Suppose that one year passed and the interest rate remains at 10%. Is the position still fully fuided? Is it still immunized? If not, what actions are required? points) c

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