Chapter 15 - Immunization
236 Time Line The correct Price on the TI 8% Bond is $950.26

Thus

[$1,000,000]  = 869.7  =>  870  bonds
[ (1.10)]
-----------------
$950.26
  870  *  $950.26  = $826,726.20

: At t=0 purchase $870,000 in TI 8% three year bonds for a total of $826,726.20

238 Table 15-3: The correct Price on the TI 8% Bond is $950.26
238

0.4382  *  $826,446.28  = 372.3  =>  372  7% HR bonds
$972.73
 
0.5618  *  $826,446.28  = 488.6   =>  489  8% TI bonds
$950.26