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Your firm has an obligation to pay a parts supplier seven equal annual payments of $2,000,000 (the first payment is due 1 year from today).
Your firm has an obligation to pay a parts supplier seven equal annual payments of $2,000,000 (the first payment is due 1 year from today). Assume the Treasury yield curve is a flat 6.00%, and today your firm purchases zero-coupon Treasury bonds to fund and immunize the obligation. All bonds that your firm purchases have the same maturity. Please show your work.
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