1. Example: The present value of liabilities is $200 million. The mo liabilities is 4. What should be the market value of asset to hedge the portfolio against interest rate risk?
2. (Present-value comparison) You are offered ?$110,000 today or $320,000 in 14 years. Assuming that you can earn 12 percent on your?money, which should you? choose?
If you are offered ?$320,000 in 14 years and you can earn 12 percent on your? money, what is the present value of ?$320,000?? _______?$ ?(Round to the nearest? cent.)