Question: Client Billy Mack Co . wants to immunize its pension obligations ( present value = $ 1 5 0 million with a duration of 2

Client Billy Mack Co. wants to immunize its pension obligations (present value = $150 million with a duration of 22 years) with two $1000 face value bonds. The first bond is a 7-year 5% annual coupon bond issued by Jaime Corp. The second bond issuer, Kari Ltd., has issued a consol bond paying a 10% annual coupon perpetually. Ms. Thompson wants you to calculate the money Billy Mack should allocate to each of these bonds to immunize its pension against interest rate risk. The yield curve is flat at 6%.
Client Billy Mack Co. wants to immunize its pension obligations (present

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