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A company has liabilities of $10,000 due in 1 year and $20,000 due in 2 years....

A company has liabilities of $10,000 due in 1 year and $20,000 due in 2 years. The company would like to cash flow match these liabilities with a combination of the following assets: a 2-year bond with annual coupons of 5% yielding 4% a 1-year bond with annual coupons of 6% yielding 3% What is the par value of the 1-year bond that should be purchased to cash flow match this portfolio? 8,300 8,500 8,800 9,000 9,400

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Answer is 8800

jeff jeffy answered 1 year ago
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