Question: In the pension fund model, suppose there is a fourth bond, bond 4. Its unit cost in year 1 is $1020, it returns coupons of

In the pension fund model, suppose there is a fourth bond, bond 4. Its unit cost in year 1 is $1020, it returns coupons of $70 in years 2 to 5 and a payment of $1070 in year 6. Modify the model to incorporate this extra bond and reoptimize. Does the solution change–that is, should James purchase any of bond 4?

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