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R 19-1 A company has liability cash flows of $6,000 in 7 years and $1,000 in 10 years. The company purchases two assets. The first
R 19-1 A company has liability cash flows of $6,000 in 7 years and $1,000 in 10 years. The company purchases two assets. The first asset will provide a cash flow of $5,000 in 4 years. The second asset will provide a cash flow of X in t years. The yield rate on all assets and liabilities is 6% per year cffective. (a) Write down the three conditions that would guarantee Redington immunization. Where appropriate, use the information provided in this question. (b) Find payment time t and amount X of the second asset so that the firm's liabilities are immunized. (c) Does this investment strategy provide Redington immunization to the company
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