Face value and market value of that zero-coupon bond

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An insurance company must make payments to a customer of $10 million in one year and $5 million in five years. The yield curve is flat at 10%. a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase?

(Do not round intermediate calculations. Round your answer to 4 decimal places.)

What must be the face value and market value of that zero-coupon bond? (Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places.)

Reference no: EM131909423

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