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Question 26 (1 point) You work for an insurance company, which expects an obligation of $1,705,000 in 6- years. To ensure the insurance company can
Question 26 (1 point) You work for an insurance company, which expects an obligation of $1,705,000 in 6- years. To ensure the insurance company can cover the obligation, you are told that you should invest in 1000 high-yield 9.3% annual coupon bonds with a 9.3% yield to maturity that matures in 6-years with a duration of 4.86 years. However, you learned in your finance program at Georgia Southern that this is not a good idea and you suggest that it is better to invest in an 8-year bond with the same coupon rate (9.3%) and yield to maturity (9.3%) and a duration of close to 6 years. Calculate the price in 6 years of the bond that matures in 8 years if interest rates dropped to 8% $1,045 None of the answers is correct $1,682 $1,023 $1,000
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