A riskfree security pays a dividend of $200 after one year, $400 after two years, $800 after three years, and thereafter it never pays dividends again. The riskfree interest rate is 3%. What is the current price of the security?
A riskfree security pays a dividend of $200 after one year, $400 after two years, $800 after three years, and thereafter it never pays dividends again. The riskfree interest rate is 3%. What is the current price of the security?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
A riskfree
security pays a dividend of $200 after one year, $400 after two years, $800
after three years, and thereafter it never pays dividends again. The riskfree interest rate
is 3%. What is the current price of the security?
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