Question 25\ 1 pts\ 25. An investor has a

10%

annual Ifoupon bond matures in three years with par value of

$1000

as the liability. If the investor's investment horizon is 2 years, which of the following immunization strategy would work to hedge against the interest rate risk? Assume the yield curve is

10%

flat\ a. Purchase a 2-year zero-coupon bond with face value of

$1210

.\ b. Purchase a 3-year zero-coupon bond with face value of

$1000

.\ c. Purchase a 3-year zero-coupon bond with face value of

$1331

.\ d. Purchase a 2-year zero-coupon bond with face value of

$1100

.\ e. Purchase a 1-year zero-coupon bond with face value of

$1100

.

25. An imvestor has a 10% annual I' Coupon bond matures in three years with par value of $1000 as the liability. If the investor's investment horizon is 2 years, which of the following immunization strategy would work to hedge against the interest rate risk? Assume the yield curve is 10% flat. a. Purchase a 2-year zero-coupon bond with face value of $1210. b. Purchase a 3 -year zero-coupon bond with face value of $1000. c. Purchase a 3-year zero-coupon bond with face value of $1331. d. Purchase a 2 -year zero-coupon bond with face value of $1100. e. Purchase a 1-year zero-coupon bond with face value of $1100