You are given the following information about a company's liabilities: Present value = 9697 Macaulay

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You are given the following information about a company's liabilities:

• Present value = 9697

• Macaulay duration = 15.24

• Macaulay convexity = 242.47

The company decides to create an investment portfolio by purchasing a 5-year bond and a 20-year bond. The company would like its position to be Redington immunized. The effective annual yield rate for both bonds is 7.5%.

Determine how much the company should invest in these bonds.

Related Book For answer-question

Financial Reporting Financial Statement Analysis and Valuation a strategic perspective

ISBN: 978-1337614689

9th edition

Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

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Posted Date: Jun 16, 2023 05:45 AM

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You are given the following information about a company's liabilities: Present value = 9697 Macaulay

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To determine the investment amounts for the 5year and 20year bonds to achieve Redington immunization ... View the full answer

Financial Reporting Financial Statement Analysis and Valuation a strategic perspective

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