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| rev | Admin | (Created page with "'''Solution: A''' The PV and duration of the liability payments using <math>7 \%</math> rate are <math>P V=1,750,000 v^{12}=777,021</math> and duration 12 . The amount invested in the 5-year bond is <math>\frac{242,180}{1.07^5}=172,671</math>, Thus, the amount invested in the 14 year bond is <math>777,021-172,671=604,350</math>. The maturity value of the 14 -year bond is <math>604,350(1.07)^{14}=1,558,337</math>. The surplus if the interest rate moves to <math>4 \%</m...") | Nov 20'23 at 22:09 | +652 |