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| rev | Admin | (Created page with "'''Solution: C''' Let <math>x</math> and <math>y</math> be the amount invested in the five and twenty year bonds respectively. To match the present values: <math>x+y=500,000 e^{-0.07(10)}+500,000 e^{-0.07(15)}=423,262</math>. To match the durations, noting that the denominators of the durations for assets and liabilities are the same, <math>5 x+20 y=500,000(10) e^{-0.07(10)}+500,000(15) e^{-0.07(15)}=5,107,460</math>. Subtracting five times the first equation from the s...") | Nov 20'23 at 21:28 | +629 |