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Use the Following Information to Answer the Question(s)below

Question 48

Multiple Choice

Use the following information to answer the question(s) below:
Suppose the term structure of risk-free interest rates is given as:
Term 1 year 2 years 3 years 5 years 10 years
Rate 2.25% 2.80% 3.20% 4.10% 6.30%
-The present value of an investment that pays $2000 in one year and $3000 in three years for certain is closest to:


A) $4707.
B) $4685.
C) $4729.
D) $5000.

Correct Answer:

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