Explore BrainMass

Explore BrainMass

    Bonds (Yield; Liability; Bond Maturity)

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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%?

    © BrainMass Inc. brainmass.com June 3, 2020, 5:07 pm ad1c9bdddf