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M&B3 3rd Edition by Dean Croushore
Edition 3ISBN: 978-1285167961M&B3 3rd Edition by Dean Croushore
Edition 3ISBN: 978-1285167961 Exercise 10
Suppose that you are considering the purchase of a security that has the following timeline of payments:
a How much would you be willing to pay for this security if the market interest rate is 6 percent
b Suppose that you have just purchased the security, and suddenly the market interest rate falls to 5 percent. What is the security worth
c Suppose that one year has elapsed, you have received the fi rst payment of $600, and the market interest rate is still 5 percent. How much would another investor be willing to pay for your security
d Suppose that two years have elapsed since you purchased the security, and you have received the fi rst two payments of $600 each. Now suppose that the market interest rate suddenly jumps to 10 percent. How much would another investor be willing to pay for your security
a How much would you be willing to pay for this security if the market interest rate is 6 percent
b Suppose that you have just purchased the security, and suddenly the market interest rate falls to 5 percent. What is the security worth
c Suppose that one year has elapsed, you have received the fi rst payment of $600, and the market interest rate is still 5 percent. How much would another investor be willing to pay for your security
d Suppose that two years have elapsed since you purchased the security, and you have received the fi rst two payments of $600 each. Now suppose that the market interest rate suddenly jumps to 10 percent. How much would another investor be willing to pay for your security
Explanation
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M&B3 3rd Edition by Dean Croushore
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