If the risk-free rate of interest (r) is 7%, then you should be indifferent between receiving $750 today or A. $802.50 in one year. B. $750.00 in one year. C. $700.93 in one year. D. none of the above
If the risk-free rate of interest (r) is 7%, then you should be indifferent between receiving $750 today or A. $802.50 in one year. B. $750.00 in one year. C. $700.93 in one year. D. none of the above
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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![If the risk-free rate of interest (r) is 7%, then you should be indifferent between receiving $750 today or
A. $802.50 in one year.
O B. $750.00 in one year.
OC. $700.93 in one year.
D. none of the above
nook Air](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3966b9a7-fe71-44cf-b953-e8752bb97164%2Fb502040f-368d-42ae-a6f1-19e0835ab3ab%2Fowhje7u_processed.jpeg&w=3840&q=75)
Transcribed Image Text:If the risk-free rate of interest (r) is 7%, then you should be indifferent between receiving $750 today or
A. $802.50 in one year.
O B. $750.00 in one year.
OC. $700.93 in one year.
D. none of the above
nook Air
Expert Solution
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Step 1
The present value is the value of the sum received at time 0. It is the current value of the sum that will be received in the future period.
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