SOA Exam FM Sample Question 344
Study guide: Exam FM-2
A company faces the following liabilities at the end of the corresponding years:
| Year | 1 | 2 | 3 | 4 |
|---|---|---|---|---|
| Liability | 5,766 | X |
15,421 | 7,811 |
The company can invest in the following three annual coupon bonds redeemable at par:
| Term (in years) | Annual coupon rate | |
|---|---|---|
| Bond A | 1 | 1% |
| Bond B | 3 | 5% |
| Bond C | 4 | 7% |
The company invests in each bond so that the asset and liability cash flows are exactly matched.
Calculate X.
- A) 1221
- B) 1245
- C) 1290
- D) 1318
- E) 1375
Answer this question and see the worked solution