Select all the statements on perpetuities that are correct. a. The present value of a perpetuity increases if the interest rate increases. b. If I multiply the present value of a perpetuity with the interest rate then I get the value of a single payment of the cashflow stream. c. The present value value of a perpetuity is independent of the interest rate. d. The present value of a perpetuity is infinite as all the payments add up to infinity. e. A perpetuity describes a constant cashflow at the end of each year that continues infinitely long.
Select all the statements on perpetuities that are correct. a. The present value of a perpetuity increases if the interest rate increases. b. If I multiply the present value of a perpetuity with the interest rate then I get the value of a single payment of the cashflow stream. c. The present value value of a perpetuity is independent of the interest rate. d. The present value of a perpetuity is infinite as all the payments add up to infinity. e. A perpetuity describes a constant cashflow at the end of each year that continues infinitely long.
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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Select all the statements on perpetuities that are correct.
a. The present value of a perpetuity increases if the interest rate increases.
b. If I multiply the present value of a perpetuity with the interest rate then I get the value of a single payment of the cashflow stream.
c. The present value value of a perpetuity is independent of the interest rate.
d. The present value of a perpetuity is infinite as all the payments add up to infinity.
e. A perpetuity describes a constant cashflow at the end of each year that continues infinitely long.
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Step 1: Part a. The present value of a perpetuity increases if the interest rate increases.
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