A company must make payments of $10 annually in the form of a 10-year annuity-immediate. It plans

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A company must make payments of $10 annually in the form of a 10-year annuity-immediate. It plans to buy two zero coupon bonds to fund these payments. The first bond matures in 2 years and the second bond matures in 9 years, and both are purchased to yield 10% effectively. What face amount of each bond should the company buy in order to be immunized from small changes in the interest rate (Redington immunization)?

Posted Date: May 18, 2024 12:15 PM

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A company must make payments of $10 annually in the form of a 10-year annuity-immediate. It plans

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