SOA Exam FM Sample Question 339

Study guide: Exam FM-2

You are given the following information regarding Company J.

• i) It has a single liability of 1,750,000 to be paid 12 years from now.
• ii) Its asset portfolio consists of a zero-coupon bond maturing in 5 years for 242,180 and a zero-coupon bond maturing in n years.
• iii) At an annual effective interest rate of 7%, Company J's position is fully immunized.

Calculate n.

• A) 13
• B) 14
• C) 15
• D) 16
• E) 17

Answer this question and see the worked solution

Concepts tested

• Immunization
• Full Immunization
• Duration
• Bonds
• Portfolio
• Asset-Liability Portfolio
• Duration Matching
• Redington Immunization

More questions from this set

• SOA Exam FM Sample Question 338
• SOA Exam FM Sample Question 340