Problem 11-11 A pension plan is obligated to make disbursements of $10 million, $2 million, and...

Problem 11-11

A pension plan is obligated to make disbursements of $10 million, $2 million, and $10 million at the end of each of the next three years, respectively. The interest rate is 9% annually. If the plan wants to fully fund and immunize its position, how much of its portfolio should it allocate to one-year zero-coupon bonds and perpetuities, respectively, if these are the only two assets funding the plan? (Round your answers to 2 decimal places. Omit the "%" sign in your response.)


Investment in one-year zero-coupon bonds		%
Investment in perpetuity		%

Expert Solution

jeff jeffy answered 1 year ago

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