Question: Please answer the B part. Working is not required. Thanks My pension plan will pay me $17,000 once a year for a 10-year period. The

Please answer the B part. Working is not required. Thanks

Please answer the B part. Working is not required. Thanks My pension

My pension plan will pay me $17,000 once a year for a 10-year period. The first payment will come in exactly five years. The pension fund wants to immunize its position. a. What is the duration of its obligation to me? The current interest rate is 11.0% per year. (Do not round intermediate calculations. Round your answer to 4 decimal places.) Answer is complete and correct. years 8.6544 Duration b. If the plan uses 5-year and 20-year zero-coupon bonds to construct the immunized position, how much money ought to be placed in each bond? (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Answer is complete but not entirely correct. Investment 5-year zero-coupon bond 84 20-year zero-coupon bond 130 My pension plan will pay me $17,000 once a year for a 10-year period. The first payment will come in exactly five years. The pension fund wants to immunize its position. a. What is the duration of its obligation to me? The current interest rate is 11.0% per year. (Do not round intermediate calculations. Round your answer to 4 decimal places.) Answer is complete and correct. years 8.6544 Duration b. If the plan uses 5-year and 20-year zero-coupon bonds to construct the immunized position, how much money ought to be placed in each bond? (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Answer is complete but not entirely correct. Investment 5-year zero-coupon bond 84 20-year zero-coupon bond 130

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!