Suppose the term structure of interest rates is shown below: Term Rate (EAR%) 1 year 5.00% 2 years 4.50% 3 years 5 years 10 years 20 years 4.30% 4.30% 4.25% 4.15% The present value of receiving $1000 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 (EAR%) 1 year 5.00% 2 years 4.50% 3 years 5 years 10 years 20 years 4.30% 4.30% 4.25% 4.15% The present value of receiving $1000 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%)
1 year
5.00%
2 years 3 years 5 years 10 years 20 years
4.50%
4.30% 4.30%
4.25% 4.15%
The present value of receiving $1000 per year with certainty at the end of the next three
years is closest to:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F28163d2c-1b78-4962-9ace-f366cfc93545%2Fd4f6a465-1a93-461a-99aa-1c649072991c%2F9e2xena_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose the term structure of interest rates is shown below:
Term
Rate
(EAR%)
1 year
5.00%
2 years 3 years 5 years 10 years 20 years
4.50%
4.30% 4.30%
4.25% 4.15%
The present value of receiving $1000 per year with certainty at the end of the next three
years is closest to:
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