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Q3: Liability payments of 100 each are due to be paid in 2, 4, and 6 years from now Asset cash flow consists of A1
Q3: Liability payments of 100 each are due to be paid in 2, 4, and 6 years from now Asset cash flow consists of A1 in year 1 and As in year 5. The yield for all payments is 10%. An attempt is made to have the asset cash flow immunize the liability cash flow by matching the present value and duration. a) Find A1 and As
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