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Suppose you will go to graduate school for 3 years beginning in year 5. Tuition is...

Suppose you will go to graduate school for 3 years beginning in year 5. Tuition is $25,109 per year, due at the end of each school year. Assume a flat yield curve of 0.03.Assume annual compounding. In the above description, if you see a flat yield curve of 0.08 for example, then it means that the yield at all maturities is 8%.Suppose, the tuition obligations have a Macaulay duration of 5.14 in years and a present value of 42,661. In order to immunize against the tuition payments by investing in some combination of two bonds with duration 2.52 and 8.55, what is the dollar amount that you should invest in the bond with duration 8.55?

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

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