Question: . Q3 In this problem the term structure of interest rates is flat at 5%. The following bonds and liabilities are given: Bond A: A

. Q3 In this problem the term structure of interest rates is flat at 5%. The following bonds and liabilities are given: Bond A: A zero-coupon bond with a face value of $100 and a time to maturity of 3 years. Bond B: A zero-coupon bond with a face value of $100 and a time to maturity of 6 years. Bond C. A zero-coupon bond with a face value of $100 and a time to maturity of 10 years. Liability X: A one-time liability of $100 maturing in 4 years. Liability Y: A one-time liability of $100 maturing in 9 years. Suppose you have liability X and want to immunize it using bonds A and B. How would you invest in each bond? b. Suppose you have liability X and want to immunize it using bonds B and C. How would you invest in each bond? Suppose you have both liabilities X and Y and want to immunize your position using bonds Band C. How would you invest in each bond? a. C

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