You will be paying $$9,800$ a year in tuition expenses at the end of the next two years. Bonds currently yield $9\%.$

Required:

What are the present value and duration of your obligation?

What maturity zero$-$coupon bond would immunize your obligation?

Suppose you buy a zero$-$coupon bond with value and duration equal to your obligation. Now suppose that rates immediately increase to $11\%.$ What happens to your net position, that is$,$ to the difference between the value of the bond and that of your tuition obligation?

What if rates fall immediately to $8\%?$