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Question A company must make a payment of $7500 in 5 years. The only investments available are 2-year zero coupon bonds and 9-year zero coupon
Question A company must make a payment of $7500 in 5 years. The only investments available are 2-year zero coupon bonds and 9-year zero coupon bonds. These bonds could be purchased in any quantity in order to satisfy the first two conditions of Redington immunization. The yield rate is 5% effective. Let X be the face value of the 2-year bond and Y the face value of the 9-year bond. Compute the ratio Y/X. Possible Answers A 1.049 B 1.055 C 1.092 D 1.225 E 1.239
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