The interest rate, which fluctuates more: short-term interest rate or long-term interest rate. Introduction: Short-term interest rate: The interest rate, which applies on the securities and which has the short maturity period of less than a year is known as the short-term interest rate. Long-term Interest Rate: The interest rate, which applies on the securities and which has the long maturity period of more than one year is known as the long-term interest rate.

Question

An annuity provides payments at the end of each two-year period for twenty years. It pays $1,000 at the end of the first period and increases the payment by $1,000 in each subsequent period, so that at the end of the tenth period it pays $10,000. Given a 2% nominal annual interest rate compounded semiannually, determine in which of the following ranges is the present value of this annuity. please use tvm if neededI

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Question

Chapter 6, Problem 2Q

Summary Introduction

To identify: The interest rate, which fluctuates more: short-term interest rate or long-term interest rate.

Introduction:

Short-term interest rate:

The interest rate, which applies on the securities and which has the short maturity period of less than a year is known as the short-term interest rate.

Long-term Interest Rate:

The interest rate, which applies on the securities and which has the long maturity period of more than one year is known as the long-term interest rate.

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