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Randy currently has an obligation that he will pay $1 million ayear for the next 3 years, what is the duration of his obligationif the appropriate discount rate is 5%?If Randy wants to immunize his obligation using a 1-year zerocoupon bond and a perpetuity both yielding 6%. I rounded thedurations to two decimal places to minimize rounding errors.What is the weight he should invest in the zero?What is the weight he should invest in the perpetuity?
