Suppose the term structure of interest rates is shown below: Term Rate 1 year 2 years 3 years 5 years 10 years 20 years (EAR%) 5.00% 4.80% 4.60% 4.50% 4.25% 4.15% The present value (PV) of receiving $1,100 per year with certainty at the end of the next three years is closest to
Suppose the term structure of interest rates is shown below: Term Rate 1 year 2 years 3 years 5 years 10 years 20 years (EAR%) 5.00% 4.80% 4.60% 4.50% 4.25% 4.15% The present value (PV) of receiving $1,100 per year with certainty at the end of the next three years is closest to
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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![Suppose the term structure of interest rates is shown below:
Term
Rate
(EAR%) 5.00% 4.80%
O $2,408
1 year 2 years 3 years 5 years 10 years 20 years
The present value (PV) of receiving $1,100 per year with certainty at the
end of the next three years is closest to
O $3,612
O $4,214
O $3,010
4.60% 4.50% 4.25% 4.15%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcf7465a1-1f06-4ade-b6d3-6ab1782d9bd3%2F12a79b59-b141-4f37-bc0d-3091aa29075d%2Fj3rs05k_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose the term structure of interest rates is shown below:
Term
Rate
(EAR%) 5.00% 4.80%
O $2,408
1 year 2 years 3 years 5 years 10 years 20 years
The present value (PV) of receiving $1,100 per year with certainty at the
end of the next three years is closest to
O $3,612
O $4,214
O $3,010
4.60% 4.50% 4.25% 4.15%
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