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Business, 30.04.2021 18:40 witcol386

William plans to attend college for 3 years. His first day of college will be one year from today. He expects tuition to cost $15,000 in the first year. He also estimates that the college will increase his tuition by 4% each year for the next two years. Tuition costs are due at the beginning of each academic year. William would like to exactly match these liabilities using the following assets: a one-year coupon bond with annual coupon of 3% and a yield to maturity of 4% a two-year zero coupon bond with a yield to maturity of 4.5% a three-year coupon bond with annual coupons of 7% and a yield to maturity of 5% What is the total cost of the asset portfolio that will exactly match the liabilities

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