Firm ABC has a single liability of 5000 due in 8 years and will invest in 5-year and 10-year bonds to meet the first two conditions of immunization. Both bonds can be purchased in any face amount. The 5-year bond pays semi-annual coupons while the 10-year bond is zero-coupon. The nominal annual interest rate for market, bonds, and coupons is 6%. What face amount of the 5-year bond is needed?

Answer rating: 100% (QA)

answers amount needed after 8 year is 5000 FV PV 1RN HER... View the full answer