Today is 16 December 2021. A pension fund has a $50 million obligation exactly 7 years from now and pays 3% interest (compounded annually) on obligation. Assume that the term structure is flat. How many AAPL and MSFT bonds should the pension fund buy to form a pom that will ensure that the pension fund will meet its obligation in 7 years' time APL bond has a modified duration of 19.85 and MSFT bond has mc uration of 3.65. se the information provided in the table below. Note that the quoted price ean price. Price ($) Yield (%) Par value ($) Modified duration (%) Last coupon date Coupon frequency MSFT 1065.597 3 1,000 3.65 03 May 2021 annually AAPL 967.606 3 1,000 19.85 08 Aug 202 annually

Today is 16 December 2021. A pension fund has a $50 million obligation exactly 7 years from now and pays 3% interest (compounded annually) on obligation. Assume that the term structure is flat. How many AAPL and MSFT bonds should the pension fund buy to form a pom that will ensure that the pension fund will meet its obligation in 7 years' time APL bond has a modified duration of 19.85 and MSFT bond has mc uration of 3.65. se the information provided in the table below. Note that the quoted price ean price. Price ($) Yield (%) Par value ($) Modified duration (%) Last coupon date Coupon frequency MSFT 1065.597 3 1,000 3.65 03 May 2021 annually AAPL 967.606 3 1,000 19.85 08 Aug 202 annually

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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