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| rev | Admin | (Created page with "'''Solution: D''' <math display="block"> \begin{gathered} P V=\frac{20}{(1+5 \%)^{10}}+\frac{30}{(1+5 \%)^{30}}=12.28+6.94=19.22 \text { million } \\ D=\frac{12.28 * 10+6.94 * 30}{19.22}=17.22 \\ M D=\frac{D}{1+y}=16.40 \end{gathered} </math> <math>\mathrm{y}=5 \%</math> because the yield curve is flat When rates drop by <math>0.25 \%</math>, the PV of liabilities will go up by <math>0.25 \% * M D * P V=</math> 0.7881 million First, you calculate the desired MD of y...") | Dec 5'23 at 0:37 | +1,446 |