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Problem 16-9 An insurance company must make payments to a customer of $9 million in one...
An insurance company must make payments to a customer of $8 million in one year and...
An insurance company must make payments to a customer of $8 million in one year and $3 million in four years. The yield curve is flat at 9%. a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? (Do not round intermediate calculations. Round your answer to 4 decimal places.) Maturity of zero coupon bond years b. What must be the face...
An insurance company must make payments to a customer of $13 million in one year and...
An insurance company must make payments to a customer of $13 million in one year and $9 million in three years. The yield curve is flat at 11%. a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? (Do not round intermediate calculations. Round your answer to 4 decimal places.) Maturity of zero coupon bond years b. What must be the face...
An insurance company must make payments to a customer of $14 million in one year and...
An insurance company must make payments to a customer of $14 million in one year and $8 million in six years. The yield curve is flat at 12%. a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? (Do not round intermediate calculations. Round your answer to 4 decimal places.) Maturity of zero coupon bond years b. What must be the face...
An insurance company must make payments to a customer of $12 million in one year and...
An insurance company must make payments to a customer of $12 million in one year and $6 million in three years. The yield curve is flat at 8%. a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? (Do not round intermediate calculations. Round your answer to 4 decimal places.) Maturity of zero coupon bond years b. What must be the face...
An insurance company must make payments to a customer of $7 million in one year and...
An insurance company must make payments to a customer of $7 million in one year and $4 million in three years. The yield curve is flat at 8%. a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? (Do not round intermediate calculations. Round your answer to 4 decimal places.) Maturity of zero coupon bond 1.6576 years b. What must be the...
An insurance company must make payments to a customer of $10 million in 5 years and...
An insurance company must make payments to a customer of $10 million in 5 years and $25 million in 30 years. The yield curve is flat at 8%. a) What is the present value and duration of its obligation? b) If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero- coupon bond, what maturity bond must it purchase? Suppose you buy a zero-coupon bond with value and duration equal to...
An insurance company must make payments to a customer of 10$ million in one year and...
An insurance company must make payments to a customer of 10$ million in one year and 5$ million in five years. The yield curve is flat at 10%. a. If it wants to fully find and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? b. What amount should be invested in the zero-coupon bonds? What will be the maturity value of the zero-coupon bonds? c. What will be...
12_CH.16 SP2019 Help Save & Exit Submit Problem 16-12 You will be paying $11,000 a year in tuitio...
12_CH.16 SP2019 Help Save & Exit Submit Problem 16-12 You will be paying $11,000 a year in tuition expenses at the end of the next two years. Bonds currently yield 9%. a. What is the present value and duration of your obligation? (Do not round intermediate calculations. Round "Present value" to 2 decimal places and "Duration" to 4 decimal places.) ed kPresent vale ces b. What maturity zero-coupon bond would immunize your obligation? (Do not round intermediate calculations. Round "Duration"...
Pension funds pay lifetime annuities to recipients. If a firm will remain in business indefinitely, the...
Pension funds pay lifetime annuities to recipients. If a firm will remain in business indefinitely, the pension obligation will resemble a perpetuity. Suppose, therefore, that you are managing a pension fund with obligations to make perpetual payments of $3.4 million per year to beneficiaries. The yield to maturity on all bonds is 18.5%. a. If the duration of 5-year maturity bonds with coupon rates of 14.6% (paid annually) is four years and the duration of 20-year maturity bonds with coupon...
Pension funds pay lifetime annuities to recipients. If a firm will remain in business indefinitely, the...
Pension funds pay lifetime annuities to recipients. If a firm will remain in business indefinitely, the pension obligation will resemble a perpetuity. Suppose, therefore, that you are managing a pension fund with obligations to make perpetual payments of $1.4 million per year to beneficiaries. The yield to maturity on all bonds is 13.0%. a. If the duration of 5-year maturity bonds with coupon rates of 9.0% (paid annually) is four years and the duration of 20-year maturity bonds with coupon...
An insurance company must make payments to a customer of $8 million in one year and $3 million in four years. The yield curve is flat at 9%. a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? (Do not round intermediate calculations. Round your answer to 4 decimal places.) Maturity of zero coupon bond years b. What must be the face...
An insurance company must make payments to a customer of $13 million in one year and $9 million in three years. The yield curve is flat at 11%. a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? (Do not round intermediate calculations. Round your answer to 4 decimal places.) Maturity of zero coupon bond years b. What must be the face...
An insurance company must make payments to a customer of $14 million in one year and $8 million in six years. The yield curve is flat at 12%. a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? (Do not round intermediate calculations. Round your answer to 4 decimal places.) Maturity of zero coupon bond years b. What must be the face...
An insurance company must make payments to a customer of $12 million in one year and $6 million in three years. The yield curve is flat at 8%. a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? (Do not round intermediate calculations. Round your answer to 4 decimal places.) Maturity of zero coupon bond years b. What must be the face...
An insurance company must make payments to a customer of $7 million in one year and $4 million in three years. The yield curve is flat at 8%. a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? (Do not round intermediate calculations. Round your answer to 4 decimal places.) Maturity of zero coupon bond 1.6576 years b. What must be the...
An insurance company must make payments to a customer of $10 million in 5 years and $25 million in 30 years. The yield curve is flat at 8%. a) What is the present value and duration of its obligation? b) If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero- coupon bond, what maturity bond must it purchase? Suppose you buy a zero-coupon bond with value and duration equal to...
12_CH.16 SP2019 Help Save & Exit Submit Problem 16-12 You will be paying $11,000 a year in tuition expenses at the end of the next two years. Bonds currently yield 9%. a. What is the present value and duration of your obligation? (Do not round intermediate calculations. Round "Present value" to 2 decimal places and "Duration" to 4 decimal places.) ed kPresent vale ces b. What maturity zero-coupon bond would immunize your obligation? (Do not round intermediate calculations. Round "Duration"...
Pension funds pay lifetime annuities to recipients. If a firm will remain in business indefinitely, the pension obligation will resemble a perpetuity. Suppose, therefore, that you are managing a pension fund with obligations to make perpetual payments of $3.4 million per year to beneficiaries. The yield to maturity on all bonds is 18.5%. a. If the duration of 5-year maturity bonds with coupon rates of 14.6% (paid annually) is four years and the duration of 20-year maturity bonds with coupon...
Pension funds pay lifetime annuities to recipients. If a firm will remain in business indefinitely, the pension obligation will resemble a perpetuity. Suppose, therefore, that you are managing a pension fund with obligations to make perpetual payments of $1.4 million per year to beneficiaries. The yield to maturity on all bonds is 13.0%. a. If the duration of 5-year maturity bonds with coupon rates of 9.0% (paid annually) is four years and the duration of 20-year maturity bonds with coupon...
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