In the pension fund problem, suppose there’s a fourth bond, bond 4. Its unit cost in 2006 is $1020, it returns coupons of $70 in years 2007 to 2010 and a payment of $1070 in 2011. Modify the model to...


In the pension fund problem, suppose there’s a fourth bond, bond 4. Its unit cost in 2006 is $1020, it returns coupons of $70 in years 2007 to 2010 and a payment of $1070 in 2011. Modify the model to incorporate this extra bond and reoptimize. Does the solution change— that is, should James purchase any of bond 4?



May 22, 2022
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