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Find shield obligation from unexpected changes in interest

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Reference no: EM132658958

Problem 1: Mr. David has an obligation to pay $500 at the end of this year andto pay $3,000 at the end of the next year, today's pure yield curve is flat at 6%,. To shield his obligation from unexpected changes in interest rates, Mr. David should

A. Buy zero-coupon bonds with maturity of about 1.65 years
B. Buy zero-coupon bonds with maturity of about 1.85 years
C. Buy coupon bonds with maturity of about 1.5 years
D. Buy zero-coupon bonds with maturity of about 1.79 years

Reference no: EM132658958

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