Suppose there are two bonds a 10-year zero coupon bond and, Ask an Expert

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Suppose there are two bonds, a 10-year zero coupon bond and a 2-year zero coupon bond. Currently, the discount rate, y, is 4%. Suppose we are short $1000 in par value of the 10-year zero coupon bond. How much of the 2-year zero coupon bond do we need to buy to be approximately immunized from changes in interest rates?

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Financial Management, Finance

Category:- Financial Management
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