As corporate treasurer, you have to pay $22 million in one year and…

Question Answered step-by-step As corporate treasurer, you have to pay $22 million in one year and… As corporate treasurer, you have to pay $22 million in one year and again in two years. Bonds of all maturities currently yield 7%.1) What is the duration of the liability?2) If you buy zero-coupon bonds with a maturity equal to the duration calculated in the previous part, what should be their combined face value (in $)?3) If interest rates suddenly go up to 8%, what is your immediate funding surplus (positive number) or shortfall (negative number) (in $)? Use the exact duration, not the rounded one shown as solution to part 1.4) If interest rates suddenly go down to 6%, what is your immediate funding surplus (positive number) or shortfall (negative number) (in $)? Use the exact duration, not the rounded one shown as solution to part 1.  Business Finance FINANCE 1234 Share QuestionEmailCopy link Comments (0)