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Business, 30.05.2020 20:57 lolo8787

A company must pay liabilities of $1,000 due 6 months from now and another $1,000 due one year from now. There are two available investments: (a) 6-month zero-coupon bond, $1,000 face value and a 3% annual yield rate convertible semiannually. (b) 1-year bond, $1,000 face value, 5% nominal annual coupon rate convertible semiannually with a 6% annual yield rate convertible semiannually. Find the total cost of the bonds in order to exactly match the liabilities.

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