Zero-coupon bond assuming full immunization is met

Assignment Help Financial Management

Reference no: EM13927772

[Actuarial Math] Company ABC is required to pay their customers $20,000 after 3 years. Based on an annual effective interest rate of 4%, Andy, the company’s actuary, uses full immunization strategy to construct a portfolio of assets using a 2-year zero-coupon bond and a 4-year zero-coupon bond. Calculate the par amount for the 2-year zero-coupon bond assuming full immunization is met.

Reference no: EM13927772

Questions Cloud

What penalty is the company incurring by its present order : What penalty is the company incurring by its present order size? The manager would prefer ordering 10 times each month but would have to justify any change in order size. One possibility is to simplify order processing to reduce the ordering cost.

Why is it important to be able to assume that demand : Why is it important to be able to assume that demand will be level during each six month period?If the vendor is willing to offer a discount of $ 10 per order for ordering in multiples of 50 units would you advise the manager to take advantage of t..

What is wrong with estimate of his gross profit margin : Tony works full-time as a computer-repair technician who makes on-site repairs for individuals and small businesses. He says his gross profit margin is 94% because last year his total revenues were $100,000 and his expenses were $6,000. “I’m actually..

Calculates the present value of redemption value to equal : [Actuarial Math] On 1/1/2014, PJ buys a 10,000 par value bond that pays annual coupons with the 1st coupon due on 12/31/2014. The redemption value is 10,000. PJ pays 10,000 for the bond. At issue, PJ calculates the duration of the bond to equal 15.83..

Zero-coupon bond assuming full immunization is met : [Actuarial Math] Company ABC is required to pay their customers $20,000 after 3 years. Based on an annual effective interest rate of 4%, Andy, the company’s actuary, uses full immunization strategy to construct a portfolio of assets using a 2-year ze..

Continously compounded zero rate : The 6-month zero rate is 6% with semiannual compounding. The price of a 1-year bond that provides a coupon of 10% per annum semiannually is 96. What is the 1-year continously compounded zero rate?

Actuarial math-etermine the modified duration of the payment : An annuity-immediate has level payments for n years. The average time of the payments using the method of equated time is 7 years. Determine the modified duration of the payments if the annual effective rate of interest is 5%.

What is the third-party-payer system in your organization : What is the third-party-payer system in your organization? How does this system impact your organization?

The firms total-debt-to-total-assets ratio : In 2012 Whole Foods had sales of $74 billion and a net income of $17 billion, and its year-end total assets were $121.31 billion. The firm's total-debt-to-total-assets ratio was 45.3%. Based on the DuPont equation, what was the Microsoft ROE in 2012?..

User Account

All Pages