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Suppose Company A has an obligation to pay $4 million in 4 years and $11 million in 10 years. How to invest in bonds now
Suppose Company A has an obligation to pay $4 million in 4 years and $11 million in 10 years. How to invest in bonds now so as to meet the future obligation? (Suppose that zero coupon bonds are not available)
YTM | Duration | |
Bond alpha | 9,8% | 12.15 |
Bond Gamma | 9.8% | 6.45 |
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