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Use the following information for Q29 to 231 Suppose Huron Corp. must make a $50 million pension payment every year for the next 5 years.
Use the following information for Q29 to 231 Suppose Huron Corp. must make a $50 million pension payment every year for the next 5 years. Huron decides to immunize the payment with investments in 2 year and 5 year zeros. The interest rate is 4%. 26. What percent of the portfolio should be allocated to each type of Bond. A) Approximately 88% in the 2 year and 12% in the 5 year. B) Approximately 50% in the 2 year and 50% in the 5 year. C) Approximately 69% in the 2 year and 31% in the 5 year. D) Approximately 39% in the 2 year and 61% in the 5 year. 27. What will Huron pay for these bonds? A) Approximately 89 million B) Approximately122.59 million C) Approximately 262.05 million D) Approximately 222.59 million 28. If each bond in the market has a face value of $10,000, how many 5 year bonds will they purchase? A) Approximately 8900 B) Approximately 1200 C) Approximately 8395 D) Approximately 6727
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