Suppose a pension fund must have $10,000,000 five years from now to make required payments to retirees.If the pension wants to guarantee the funds are available regardless of future interest rate changes,it should
A) sell a 5-year duration bond so that it matures with a book value of $10,000,000.
B) sell $10,000,000 face value discount bonds with a duration of five years.
C) purchase 7-year,semi-annual coupon bonds that have a duration of five years.
D) purchase 8-year,annual payment bonds that have a dollar duration of $10,000,000.
Correct Answer:
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