SOA Exam FM Sample Question 38
Study guide: Exam FM-2
Joe must pay liabilities of 2000 due one year from now and another 1000 due two years from now. He exactly matches his liabilities with the following two investments:
Mortgage I: A one year mortgage in which X is lent. It is repaid with a single payment at time one. The annual effective interest rate is 6%.
Mortgage II: A two-year mortgage in which Y is lent. It is repaid with two equal annual payments. The annual effective interest rate is 7%.
Calculate X + Y.
- A) 2600
- B) 2682
- C) 2751
- D) 2825
- E) 3000
Answer this question and see the worked solution