Consider two interest rate scenarios for investing over next 20 years. In steady scenario A, you get interested of 4% each year. In choppy scenario B, in the first year you get that rate plus 10% but then in next year get that rate minus 10% and so forth. The average rate is the same in each scenario. But for an initial investment of $4000, how much more is A worth than B at the end of the period?

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
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Consider two interest rate scenarios for investing over next 20 years. In steady scenario A, you get interested of 4% each year. In choppy scenario B, in the first year you get that rate plus 10% but then in next year get that rate minus 10% and so forth. The average rate is the same in each scenario. But for an initial investment of $4000, how much more is A worth than B at the end of the period?
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