A pension plan is obligated to make disbursements of $4 million, $6 million, and $4 million at the end of each of the next three years, respectively. The annual interest rate is 11%. If the plan wants to fully fund and immunize its position, how much of its portfolio should it allocate to one-year zero-coupon bonds and perpetuities, respectively, if these are the only two assets funding the plan? (DO NOT ROUND INTERMEDIATE CALCULATIONS. ROUND YOUR ANSWERS TO 2 DECIMAL PLACES.)

Investment in one-year zero-coupon bonds = ? (%)

Investment in perpetuity = ? (%)

Answer rating: 100% (QA)

Okay here are the calculations to solve this immunization problem Year 1 payout 4 mil... View the full answer