The insurance company wants to use The Bond as part of a portfolio designed to immunize an obligation that it foresees will come due in 15 years To create a bond portfolio with an overall duration of 15 years, the insurance company decides to buy zero coupon bonds with a maturity of 20 years (and with a YTM of 7 ) to combine with The Bond To bring the combination of The Bond plus The Zero to a combined portfolio duration of 15 years, what would be the correct mix of The Bond relative to the 20 year Zero A) percentage amount of The Bond in the portfolio B) percentage amount of The Zero in the portfolio C) Can you suggest a simpler investment that would give the insurance company a bond investment with a 15 year duration

Question

The insurance company wants to use The Bond as part of a portfolio designed to immunize an obligation that it foresees will come due in 15 years To create a bond portfolio with an overall duration of 15 years, the insurance company decides to buy zero coupon bonds with a maturity of 20 years (and with a YTM of 7 ) to combine with The Bond  To bring the combination of The Bond plus The Zero to a combined portfolio duration of 15 years, what would be the correct mix of The Bond relative to the 20 year Zero  A) percentage amount of The Bond in the portfolio B) percentage amount of The Zero in the portfolio C) Can you suggest a simpler investment that would give the insurance company a bond investment with a 15 year duration

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Question

The insurance company wants to use The Bond as part of a portfolio designed to immunize an obligation that it foresees will come due in

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