Save Answer Question 2 20 points You will be attending an MBA program that will require paying $11,000 a year in tuition expenses at the end of the year for 2 years Bonds currently yield 8 35 a What is the present value of your obligation ( sample answer $25,000) b What is the duration of your obligation (sample answer 2 53 years) c Suppose you wish to fund your obligation using 1 year zero coupon bonds and perpetuity bonds How much of 1 year zero in dollar (input example $25,000) and how much of perpetuity bonds in dollar (sample answer $25,000 ) will you want to hold to both fully fund and immunize your obligation Suppose you buy 1 year zero coupon bonds and perpetuity bonds to immunize your obligation Now suppose that rates immediately increase to 9 e What is your tuition obligation now (sample answer $25,000) f What is the value of your position in 1 year zero coupon bonds now (sample answer$25,000) g What is the value of your position in perpetuity now (sample answer $25,000) Save Answer Question 2 20 points You will be attending an MBA program that will require paying $11,000 a year in tuition expenses at the end of the year for 2 years Bonds currently yield 8 35 a What is the present value of your obligation ( sample answer $25,000) b What is the duration of your obligation (sample answer 2 53 years) c Suppose you wish to fund your obligation using 1 year zero coupon bonds and perpetuity bonds How much of 1 year zero in dollar (input example $25,000) and how much of perpetuity bonds in dollar (sample answer $25,000 ) will you want to hold to both fully fund and immunize your obligation Suppose you buy 1 year zero coupon bonds and perpetuity bonds to immunize your obligation Now suppose that rates immediately increase to 9 e What is your tuition obligation now (sample answer $25,000) f What is the value of your position in 1 year zero coupon bonds now (sample answer$25,000) g What is the value of your position in perpetuity now (sample answer $25,000)

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Save Answer Question 2 20 points You will be attending an MBA program that will require paying $11,000 a year in tuition expenses at the end of the year for 2 years  Bonds currently yield 8 35   a What is the present value of your obligation  ( sample answer  $25,000) b What is the duration of your obligation   (sample answer  2 53 years) c Suppose you wish to fund your obligation using 1 year zero coupon bonds and perpetuity bonds  How much of 1 year zero in dollar (input example  $25,000) and how much of perpetuity bonds in dollar (sample answer  $25,000 ) will you want to hold to both fully fund and immunize your obligation  Suppose you buy 1 year zero coupon bonds and perpetuity bonds to immunize your obligation  Now suppose that rates immediately increase to 9   e  What is your tuition obligation now  (sample answer  $25,000) f  What is the value of your position in 1 year zero coupon bonds now   (sample answer$25,000) g  What is the value of your position in perpetuity now   (sample answer  $25,000) Save Answer Question 2 20 points You will be attending an MBA program that will require paying $11,000 a year in tuition expenses at the end of the year for 2 years  Bonds currently yield 8 35   a What is the present value of your obligation  ( sample answer  $25,000) b What is the duration of your obligation   (sample answer  2 53 years) c Suppose you wish to fund your obligation using 1 year zero coupon bonds and perpetuity bonds  How much of 1 year zero in dollar (input example  $25,000) and how much of perpetuity bonds in dollar (sample answer  $25,000 ) will you want to hold to both fully fund and immunize your obligation  Suppose you buy 1 year zero coupon bonds and perpetuity bonds to immunize your obligation  Now suppose that rates immediately increase to 9   e  What is your tuition obligation now  (sample answer  $25,000) f  What is the value of your position in 1 year zero coupon bonds now   (sample answer$25,000) g  What is the value of your position in perpetuity now   (sample answer  $25,000)

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Save Answer Question 2 20 points You will be attending an MBA program that will require paying $11,000 a year in tuition expenses at the

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