Actuarial FM question: Dave needs to pay $1000 at the end of each year for the n

Question

Actuarial FM question:

Dave needs to pay $1000 at the end of each year for the next 3 years. He purchased 3 different annual coupon bonds to match the liabilities exactly. The bonds have the following properties:

Coupon Rate

All three bonds have a par value of $1,000 and can be redeemed at par. Dave purchased 0.9 of Bond A. Determine the coupon rate of Bond B to match the cash flows of the bonds to the cash flows of the liabilities. Assume fractional bond purchases are allowed.

Coupon Rate

Explanation / Answer

Actuarial FM question: Dave needs to pay $1000 at the end of each year for the n

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.