An insurance company has $50 million in assets and $60 million in liabilities. The assets earn a
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An insurance company has $50 million in assets and $60 million in liabilities. The assets earn a fixed rate of return of 5% annually, while the liabilities are expected to grow at an annual rate of 3%. The duration of the liabilities is 15 years. The company wants to immunize its liabilities by matching the duration of its assets with the duration of its liabilities. What is the market value of the assets needed to immunize the insurance company's liabilities?
Related Book For
Entrepreneurial Finance
ISBN: 978-0538478151
4th edition
Authors: J . chris leach, Ronald w. melicher
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