Long-term bond to duration immunize portfolio

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You have an obligation with a Present Value of $128000.00 and a duration of 7.50 years.

There are 2-zero coupon bonds that you might use to duration-immunize a portfolio. A short-term bond with a maturity of 3 years and a long-term bond with a maturity of 18 years.

The prevailing interest rate on all bonds and your obligation is constant at 6.10%.

You will buy both the short-term bond and the long-term bond to duration immunize your portfolio.

What amount of money should you spend on the short-term bond to duration immunize your obligation (ie: what present value of the short-term bond will you purchase).

Your answer should be in dollars and cents (ex: 1000.00)

Reference no: EM132742344

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