easy · Certified Financial Planner General Principles

The Yuen family is looking for a bond to perfectly immunize a future liability that will come due in exactly 12 years.

Which instrument is the best fit for this objective?

  1. A zero-coupon bond with a 12-year maturity
  2. A 12-year Treasury bond with a 5% coupon
  3. A portfolio of short-term T-bills
  4. A 15-year corporate bond with high convexity

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