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QUESTION 1 Assume annual compounding and that the yield curve is flat at 4.00% pa nominal. Suppose we have a liability of $700,000 due in

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QUESTION 1 Assume annual compounding and that the yield curve is flat at 4.00% pa nominal. Suppose we have a liability of $700,000 due in exactly 8 years' time. We want to immunize the liability by investing in a combination of 3-year coupon-paying bonds paying 4.50% annual coupons and 11-year zero coupon bonds. (a) What is the price of the 3-year bond? Select ]

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