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You want to immunize your liabilities. Using your $40m in assets, you can invest in 4-year and 12-year zero coupon bonds that pay $100 at
You want to immunize your liabilities. Using your $40m in assets, you can invest in 4-year and 12-year zero coupon bonds that pay $100 at maturity. How much do you invest into the 4- and 12-year bond, respectively?
a) x^12y = 300,000, x^4y = 150,284
b) x^12y = 296, 855, x^4y = 161,023
c) x^12y = 264,270, x^4y = 150,597
d) x^12y = 216,180, x^4y = 114,340
e) x^12y = -216,180, x^4y = -114,340
f) x^12y = -264,270, x^4y = -150,597
g) x^12y = -296, 855, x^4y = -161,023
h) x^12y = -300,000, x^4y = -150,284
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