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Determine the dollar amount that the company should invest

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A company has liabilities of $402.11 due at the end of each of the next three years. The company will invest $1,000 today to fund these payouts. The only investments available are one-year and three-year zero-coupon bonds, and the yield curve is ?at1 at a 10% annual e?ective rate. The company wishes to match the duration of its assets to the duration of its liabili- ties. Determine the dollar amount that the company should invest in each of the two bonds.

Reference no: EM133233718

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