SOA Exam FM Sample Question 110
Study guide: Exam FM-2
An insurance company wants to match liabilities of 25,000 payable in one year and 20,000 payable in two years with specific assets. The following assets are currently available:
- i) One-year bond with an annual coupon of 6.75% at par
- ii) Two-year bond with annual coupons of 4.50% at par
- iii) Two-year zero-coupon bond yielding 5.00% annual effective
Calculate the smallest amount the company needs to disburse today to purchase assets that will exactly match these liabilities.
- A) 41,220
- B) 41,390
- C) 41,560
- D) 41,660
- E) 41,750
Answer this question and see the worked solution