How can the manager immunize the obligation

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An insurance company must make a payment of $5,788.125 in 3 years and another $12,762.82 in 5 years. The market interest rate is 5 %. The company’s portfolio manager wishes to fund the obligation using 2-year zero-coupon bonds and perpetuities paying annual coupons.  How can the manager immunize the obligation? How much money should be invested in perpetuities?

Reference no: EM131047593

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