Business, 07.06.2020 05:02 kmontello5

An insurance company must pay liabilities of 99 at the end of one year, 102 at the end of two years and 100 at the end of three years. The only investments available to the company are the following three bonds. Bond A and Bond C are annual coupon bonds. Bond B is a zero-coupon bond. Bond Maturity (in years) Yeild to Maturity(Annualized) Coupon Rate
A 1 6% 7%
B 2 7% 0%
C 3 9% 5%

All three bonds have a par value of 100 and will be redeemed at par. Calculate the number of units of Bond A that must be purchased to match the liabilities exactly

a. 0.8807
b. 0.8901
c. 0.8975
d. 0.9524
e. 0.9724

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An insurance company must pay liabilities of 99 at the end of one year, 102 at the end of two years...

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