Portfolio investment in one-year zero-coupon bonds

Assignment Help Financial Management

Reference no: EM132014713

A pension plan is obligated to make disbursements of $1.2 million, $2.2 million, and $1.2 million at the end of each of the next three years, respectively. The annual interest rate is 10%. If the plan wants to fully fund and immunize its position, how much of its portfolio should it allocate to one-year zero-coupon bonds and perpetuities, respectively, if these are the only two assets funding the plan? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Portfolio Investment in one-year zero-coupon bonds %:

Investment in perpetuity %:

Reference no: EM132014713

Questions Cloud

Evaluate trends or recent approaches in compensation : Evaluate at least three trends or recent approaches in compensation that SEIIC should consider in its redesign effort, including the pros and cons of each.

Manage well diversified portfolio : Stock Hedges You manage a well diversified portfolio of $21 million. The stock portion of your portfolio is 60% and it has a beta of 1.20.

Sequence of the major steps to strategic plan : In addition, sketch out the sequence of the major steps to a strategic plan.

Why are stocks also referred to as equities : What is a stock and why are stocks also referred to as equities. In your response, be sure to explain what is meant by “equity.”

Portfolio investment in one-year zero-coupon bonds : Portfolio Investment in one-year zero-coupon bonds. Investment in perpetuity.

About wells fargo being one of the companies : In Jim Collins book, “Good to Great”, it talked about Wells Fargo being one of the companies he and his research team identified as “Great.”

Find the new DJIA level : On October 28, 2015, the DJIA opened at 9,011.26. What would the new DJIA level be? Now assume only Cisco increased by 5.6 percent. Find the new DJIA level.

What is percentage change in the bond price : A 9-year bond has a yield of 7.5% and a duration of 7.295 years. If the market yield changes by 100 basis points, what is the percentage change in the bond’s pr

Distribution did not involve any shares of preferred stock : The distribution did not involve any shares of preferred stock and Miranda did not have a choice to receive cash

User Account

All Pages