An insurance company must make payments to a customer of $11 million in one year...
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Finance
An insurance company must make payments to a customer of $11 million in one year and $7 million in five years. The yield curve is flat at 6%.
a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase?
b. What must be the face value and market value of that zero-coupon bond?
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