An Insurance company must make payments to a customer of $11 million in one year and...
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An Insurance company must make payments to a customer of $11 million in one year and $5 million in five years. The yield curve is flat at 6% a. If it wants to fully fund and Immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? (Do not round Intermediate calculations. Round your answer to 4 decimal places.) Maturity of zero coupon bond years b. What must be the face value and market value of that zero-coupon bond? (Do not round Intermediate calculations. Enter your answers In millions rounded to 2 decimal places.) Face value million Market value million An Insurance company must make payments to a customer of $11 million in one year and $5 million in five years. The yield curve is flat at 6% a. If it wants to fully fund and Immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? (Do not round Intermediate calculations. Round your answer to 4 decimal places.) Maturity of zero coupon bond years b. What must be the face value and market value of that zero-coupon bond? (Do not round Intermediate calculations. Enter your answers In millions rounded to 2 decimal places.) Face value million Market value million
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