Share
Explore BrainMass

Bonds (Yield; Liability; Bond Maturity)

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%?

Attachments

$2.19