Zero-coupon bonds to be immunized against the liability

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Reference no: EM131550999

Company XYZ has a liability of $60,000 that is due in 3 years. The company could invest in zero-coupon bonds to be immunized against the liability. Bond X is a 1-year zero coupon and Bond Y is a 5-year zero coupon bond. Company XYZ plans to invest in Bond X and Bond Y. How much should Company XYZ invest in Bond X, assuming an effective interest rate of 5%?

Reference no: EM131550999

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