Question: Hello I need your help to show me how to get the correct answer of these three questions these question about finance major from insurance
Hello I need your help to show me how to get the correct answer of these three questions
these question about finance major from insurance course. Please send me the answers as soon as possible. I need the answer today. don't forget to show your work
thank you.
-An insurance company has a liability of $10,000 that will be payable in 8 years. Assume the company can only invest in two kinds of assets 5 year- zero coupon bond and 15 year zearo coupon bond. Current interest rate is 6% Assume the face value of both bonds is $1000. Ignore profit and expense loading and just concentrate on the basic values of the assets and liabilities. Please answer the following 3 question and show your work .
37) To immunize the intrest rate the risk, how much should the insurer to invest in the 5 year zero coupon bond and how much in 15 year zero coupon bond?
A) $1882.24 in 5 year bond and $4391.88 in 15 year bond
B) $4391.88 in 5 year bond and $1882.24 in 15 year bond
C) $4210.34in 5 year bond and $2063.78 in 15 year bond
D) $2063.78 in 5 year bond and $4210.34 in 15 year bond
38) At the given interest rate what is the price of the 5 year zero coupon bond and how many 5 year zero coupon bond that the company should buy? Assume that insurance company can buy a fraction of bond.
A)$ 1338.23 per bond and 3.28 of the 5 year zero coupon bonds
B)$ 1338.23 per bond and 1.54 of the 5 year zero coupon bonds
C) $747.26 per bond and 5.63 of the 5 year zero coupon bonds
D) $747.26 per bond and 5.88 of the 5 year zero coupon bonds
39 ) At the given interest rate what is the price of the 15 year zero coupon bond and how many 15- year zero- coupon bond that the company should buy? Assume that insurance company can buy a fraction of bond .
$417.27 per bond and 4.51 of the 15 year zero coupon bonds
$417.27 per bond and 4.95 of the 15 year zero coupon bonds
$1000 per bond and 4.39 of the 15 year zero coupon bonds
$1000per bond and 1.88 of the 15 year zero coupon bonds
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