What percentage of the raised money should go in project

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Reference no: EM132002270

You plan to implement an investment project with duration of 7 years. If you raise more than what is needed for the project, you park the rest in cash. If you raise money by issuing 3-year bonds with 6% coupon (paid annually) and your plan is to stay perfectly immunized against movements of the interest rate, what percentage of the raised money should go in the project? Assume that the YTM of the bond is 5%.

Reference no: EM132002270

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