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Business, 27.05.2021 01:00 Xaviiier

A company has liabilities of $500, $900, $2000, and $2300 due at the end of years 1, 2, 3, and 4 respectively. The only investments available are the following bonds, all redeemable at par: 1-year 7% annual coupon bond 2-year 6% annual coupon bond 3-year 5% annual coupon bond 4-year 8% annual coupon bond. How much should the company invest in the 1-year bond (i. e. the price) in order to exactly match the assets and liabilities given a yield rate of 3%.

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A company has liabilities of $500, $900, $2000, and $2300 due at the end of years 1, 2, 3, and 4 res...
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