Bonds (Yield; Liability; Bond Maturity)
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Suppose the attached coupon info.
Yield to maturity is 6%
Suppose I have a liability to of $20,000 to pay at the end of year 7
1. How to immunize my liabilities with the following constraints?
Case A: Can invest any bond of different maturity shown above
Case B: Can only invest any bond (shown above) of with maturities of no more than 5 year.
2, In case A, and B, what would happen if the yield fall to 4.5%? What if the yield goes up to 7%?
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