Bank of America is currently selling a security that will pay $300 one year from today, $400 2 years from today and $800 at some undisclosed time in the future. Find the time at which the $800 payment is made if the interest rate is 11% and BofA is selling the security for $1000. Round this number of years (from part a) to the nearest year. Assuming that the last payment is made at the end of the year you found (after rounding), find the future value of the security at that time (you can ignore the $1000 price of the security). Assume the interest rate is 11%.
Bank of America is currently selling a security that will pay $300 one year from today, $400 2 years from today and $800 at some undisclosed time in the future. Find the time at which the $800 payment is made if the interest rate is 11% and BofA is selling the security for $1000. Round this number of years (from part a) to the nearest year. Assuming that the last payment is made at the end of the year you found (after rounding), find the future value of the security at that time (you can ignore the $1000 price of the security). Assume the interest rate is 11%.
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
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Bank of America is currently selling a security that will pay $300 one year from today, $400 2 years from today and $800 at some undisclosed time in the future.
- Find the time at which the $800 payment is made if the interest rate is 11% and BofA is selling the security for $1000.
- Round this number of years (from part a) to the nearest year. Assuming that the last payment is made at the end of the year you found (after rounding), find the
future value of the security at that time (you can ignore the $1000 price of the security). Assume the interest rate is 11%.
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