Calculation Question 4: (10 points) An insurance company must make payments to a customer of $10 million in one year and

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Calculation Question 4 10 Points An Insurance Company Must Make Payments To A Customer Of 10 Million In One Year And 1 (27.77 KiB) Viewed 64 times

Calculation Question 4: (10 points) An insurance company must make payments to a customer of $10 million in one year and S4 million in five years. The yield curve is flat at 10%. 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? (Do not round intermediate calculations. Round your answer to 4 decimal places.) b. What must be the face value and market value of that zero-coupon bond? (Do not round intermediate calculations, Enter your answers in millions rounded to 2 decimal places.)